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JURATION  OF 
MUNICIPAL   STREET    GRANTS 


BY 

FRED    A.  ^AKER 

OF  THE  DETROIT  BAR. 


Pro   bono  publico. 


Published   for  the  Author 


RECORD   PRINTING   CO., 

Detroit,  Mich., 

lOlO. 


Copyright,  1910, 

BY 

FRED  A.  BAKER. 


CONTENTS. 


PAGE 

Preface    vii 

Introduction.     Statement  of  a  case  in  Michigan ....      x 

Chapter  I. 

The  omission  from  the  existing  express  contracts 
of  the  parties,  of  any  covenant  on  the  part  of  the 
street  railway  company  to  surrender  possession 
at  the  end  of  the  thirty  years,  or  of  any  covenant 
on  the  part  of  the  city  to  permit  a  continuation  of 
the  public  service  after  the  thirty  years  have 
expired,  makes  the  question,  whichever  way  it  may 
be  decided,  one  of  implied  contract,  and  the  city 
must  rely  on  the  law  of  implied  contracts,  as  well 
as  the  street  railway  company. 

Applying  the  law  of  implied  contracts  to  the  grants 
made  to  the  Detroit  City  Railway  in  1862  and 
1879  the  conclusion  is  irresistable  that  the  right  of 
the  company,  its  successors  and  assigns,  to  main- 
tain and  operate  its  street  railways  on  the  streets 
of  the  city  extends  beyond  the  designated  period 
of  thirty  years 1 

Chapter  II. 

The  Detroit  United  Railway  is  under  an  obligation 
to  the  State  of  Michigan  from  which  it  received 
its  corporate  franchises  to  operate  its  street  rail- 
ways for  the  public  use,  during  the  entire  period 
for  which  the  company  was  incorporated,  and  at 
or  before  its  expiration,  to  reorganize  itself  or  to 
turn  the  property  over  to  another  company,  to  con- 
tinue the  service  it  renders  the  public 33 


II. 
Chapter  III. 

The  streets  and  highways  of  the  city  of  Detroit  are 
not  the  property  of  the  city,  or  of  the  inhabitants 
of  the  city.  They  belong  to  the  general  public, 
that  is,  to  the  people  of  the  state  and  their  visitors 
from  other  states  and  countries.  So  far  as  the 
municipal  authorities  have  been  given  any  title  to 
or  power  of  control  over  the  streets,  the  same  is 
held  in  trust  for  the  benefit  of  the  general  pub- 
lic ;  and  any  ordinance  or  resolution  of  the  common 
council,  which  would  be  detrimental  to  the  general 
public,  would  be  a  breach  of  the  trust,  and  illegal 
and  void 55 

Chapter  IV. 

Whatever  view  may  be  taken  of  the  original  con- 
tracts between  the  street  railway  company  and  the 
city,  it  is  certain  that  under  the  conditions  exist- 
ing in  1909  and  1910,  the  city  has  no  power  at  the 
expiration  of  the  thirty  years  to  expel  the  street 
railways  from  the  streets  of  the  city 73 

Chapter  V. 

Retrospectively  and  prospectively  considered  the 
Michigan  constitution  of  1908  strengthens  the  prop- 
osition that  street  grants  for  public  utilities  of  a 
permanent  nature  necessarily  contemplate  that  the 
public  service  is  to  continue  beyond  the  period  of 
limitation  fixed  by  the  local  authorities 84 

Chapter  VI. 

Conclusive  proof  of  the  implied  obligation  of  the 
city  of  Detroit  to  permit  the  street  railway  service 
to  continue  after  Nov.  14,  1909,  is  found  in  the 


Ul. 

fact  that  the  public  service  is  of  such  paramount 
and  overwhelming  importance  that  the  common 
council  of  the  city  could  not  be  induced,  with  any 
intention  that  its  order  would  be  obeyed  or  en- 
forced, to  pass  a  resolution  directing  the  Detroit 
United  Railway  to  stop  operating  its  cars  Nov. 
14,  1909,  and  to  remove  its  tracks  and  overhead 
structures  from  the  streets 97 

Chapter  VII. 

A  municipal  street  grant  does  not  establish  the  tech- 
nical relation  of  landlord  and  tenant,  which  ex- 
ists in  the  case  of  a  private  landlord  and  his  priv- 
ate tenant;  and  for  two  reasons:  (1)  the  munici- 
pality, as  the  alleged  landlord,  is  a  mere  trustee 
for  the  public;  and  (2)  the  company  grantee,  as 
the  alleged  tenant,  is  under  a  legal  obligation  to 
serve  the  public.  Hence,  whatever  the  contract 
between  the  municipality  and  the  company  may 
be,  it  is  subject  to  the  superior  and  predominate 
rights  of  the  public    119 

Chapter  VIII. 

The  correct  construction  of  the  Michigan  street  rail- 
way act  is,  that  the  "consent"  of.  the  local  author- 
ities, is  in  its  nature  perpetual;  that  the  local 
authorities  are  given  power  to  fix  the  rules,  regu- 
lations and  conditions  on  which  they  will  grant 
their  consent  and  to  agree  with  the  grantee  on  the 
rates  of  fare  and  may  limit  the  duration  of  their 
contract,  but  can  not  put  a  time  limit  on  the  local 
"consent" ;  and  that  at  the  expiration  of  any  period 
of  time  agreed  upon,  the  grantee,  its  successors  or 
assigns,  may  continue  to  occupy  the  streets,  sub- 


IV. 

ject  to  such  rules,  regulations  and  conditions  and 
rates  of  fare  as  the  law  (in  the  absence  of  a  local 
agreement)   imposes   140 

Chapter  IX. 

The  rule  that  public  grants  are  to  be  construed  strict- 
ly, in  favor  of  the  grantors  and  against  the 
grantee,  furnishes  abundant  proof  that  the  Detroit 
United  Railway  has  a  right  to  continue  to  occupy 
the  streets  and  to  serve  the  public  beyond  the 
period  of  thirty  years  155 

Chapter  X. 

Recent  street  railway  history  in  Ohio  shows  the 
necessity  of  avoiding  similar  conditions  in  Michi- 
gan     161 

Chapter  XI. 

The  final  and  conclusive  argument  in  support  of  the 
proposition  that  the  local  consent  is  perpetual, 
and  only  the  terms  and  conditions  and  the  rates 
of  fare  are  subject  to  time  limitations,  is  found  in 
the  fact  that  in  making  a  street  grant  the  local 
authorities  act  in  two  different  capacities:  (1)  in 
granting  the  local  consent  and  designating  the 
streets,  the  Aldermen  act  as  the  agents  of  the  state 
under  authority  delegated  to  them  by  the  legisla- 
ture; and  (2)  in  agreeing  with  a  street  railway 
company  on  rates  of  fare,  and  the  other  terms  and 
conditions,  the  Aldermen  act  by  permission  of  the 
legislature  as  the  contractual  agents  and  repre- 
sentatives of  the  people  of  the  municipality,  in 
virtue  of  their  election  by  the  people  to  manage 
and  control  their  local  affairs 186 


Chapter  XII. 

There  are  many  practical  reasons  concerning  the 
welfare  and  happiness  of  the  people,  why  the  street 
railway  business  of  the  city  of  Detroit,  and  its 
suburbs,  cannot  be  conducted  on  the  theory,  that 
at  the  expiration  of  municipal  street  grants,  the 
municipalities  have  the  power  to  dictate  terms  and 
conditions  and  rates  of  fare,  regardless  of  the  ques- 
tion whether  they  are  reasonable  or  unreasonable  205 

Chapter  XIII. 

"No  more  public  service  franchises  on  any  terms, 
and  tJie  termination  of  all  existing  grants  at  the 
earliest  possible  date. 

"Government  by  the  people,  and  not  by  private  cor- 
porations"     225 

Chapter  XIV. 

One  of  the  great  merits  of  requiring  or  permitting 
street  railway  corporations  to  maintain  and  oper- 
ate their  railways  subject  only  to  the  legal  obli- 
gation to  charge  reasonable  fares,  is,  that  it  does 
away  with  the  real  and  pretended  reasons  for 
municipal  ownership   228 

Chapter  XV. 

The  Supreme  Court  of  the  United  States  has  author- 
itatively established  the  doctrine  that  the  reason- 
ableness of  a  given  rate  of  fare  or  freight  of  a  pub- 
lic service  corporation,  is  a  judicial  question,  and 
that  any  legislative  or  executive  action,  anywhere 
in  the  United  States  or  in  any  territory  subject 
io  their  jurisdiction,  purporting  to  conclusively 
fix  rates  or  charges,  without  permitting  a  determin- 


VI. 

ation  of  the  question  by  the  judiciary,  after  a  full 
hearing,  is  a  deprivation  of  property  without  due 
process  of  law,  and  unconstitutional  and  void. . . .  233 

APPENDIXES. 

No.  1.  Indiana  Street  Railway  Statute 239 

No.  2.  Chicago  Street  Railway  Ordinance 253 

No.  3,  Cleveland  Street  Railway  Ordinance 324 

No.  4.  Tables  showing  influence  of  gold  on  prices . .  375 


Vll. 


PREFACE. 


My  only  excuse  for  publishing  in  book  form  for  gen- 
eral circulation,  a  brief  written  in  the  interest  of  a 
client,  is,  that  the  subject  of  the  duration  of  street  grants 
and  franchises  is  of  great  importance  to  the  legal  pro- 
fession and  municipal  authorities,  and  to  bankers,  trust 
companies,  and  other  investors,  not  only,  in  Michigan, 
but  also  throughout  the  United  States  and  Canada;  and 
no  discussion  of  a  legal  question  is  as  valuable  as  that 
which  concerns  an  actual  case. 

For  eighteen  years  it  has  been  assumed  and  the  im- 
pression has  prevailed  in  municipal,  partisan  and  news- 
paper circles  in  the  city  of  Detroit,  that  when  a  street 
grant  to  a  public  service  corporation  expires  by  its  own 
limitation,  the  municipal  authorities  have  power  to  de- 
stroy the  property  of  the  grantee,  by  compelling  it  to 
stop  operation  and  to  remove  from  the  streets;  or,  by 
imposing  such  rates  of  fare,  or  prices  for  the  services 
rendered,  as  to  amount  to  a  practical  destruction  of  the 
property;  and  that  this  can  be  done  without  interference 
on  the  part  of  the  judiciary. 

My  object  in  bringing  together  the  authorities  on 
which  the  question  depends,  and  to  which  the  learned 
judges  must  resort  in  determining  it,  is  to  show  that  the 
municipal  authorities  have  no  such  arbitrary  and  con- 
fiscatory power. 

Wlien  an  original  street  grant  is  made  by  a  municipal- 
ity to  a  public  service  corporation  the  local  authorities 
are  in  a  position  to  impose  such  terms  and  conditions  as 


Till. 

are  satisfactory  to  them,  but  the  corporation  grantee, 
not  having  yet  made  any  investment,  is  in  a  position  to 
reject  a  grant  that  is  not  satisfactory  to  it. 

When  a  grant  expires  after  the  public  improvement 
has  been  constructed  and  perhaps  has  been  in  operation 
for  many  years,  the  situation  of  the  parties  is  radically 
different,  and  they  are  not  on  an  equal  footing.  Obvious- 
ly neither  of  them  ought  to  have  any  absolute  power  in 
the  premises;  and  the  courts  on  a  proper  presentation 
of  the  controversy  ought  to  exercise  their  jurisdiction, 
and  ought  to  have  power  to  determine,  what  under  all 
the  facts  and  circumstances  is  just  and  reasonable. 

In  writing  this  brief  the  effort  has  been  to  show  that 
such  is  the  law. 

It  must  not,  even  for  a  moment,  be  assumed  that  my 
contention  is  that  a  municipal  street  grant,  with  all  its 
terms  and  conditions  and  rates  of  fare,  or  prices,  is 
perpetual.  Where  the  grant  is  for  a  limited  period,  the 
terms  and  conditions  and  rat-es  do  expire  at  the  end 
of  the  period;  but  the  right  to  maintain  and  operate  the 
property  does  not  expire.  That  right  continues  but  it 
must  be  exercised,  in  the  absence  of  a  new  agreement, 
subject  to  the  legal  obligation  of  all  public  service  cor- 
porations to  perform  the  service  for  which  they  are 
created,  for  reasonable  compensation.  In  that  sense 
the  right  to  maintain  and  operate  is  perpetual. 

The  old  terms  and  conditions  will  be  regarded  as 
prima  facie  reasonable,  but  if  they  are  found  to  be  other- 
wise, the  courts  will  overturn  them. 

I  do  not  think  I  have  made  myself  sufficiently  clear 
and  plain  to  convince  any  one  against  his  will;  but  to 
those  of  my  dear  readers,  who  are  in  a  position  to  exer- 
cise an  independent,  impartial  and  just  judgment,  the 


IX. 

following  pages  are  submitted,  with  full  confidence  that 
the  arguments  therein  set  forth,  will  not  be  lightly  re- 
jected. 

In  the  Appendix  will  be  found  tlie  Indiana  street  rail- 
way law  of  March  3,  1899;  the  Chicago  street  railway 
ordinance  of  February  11,  1907;  and  the  Cleveland  street 
railway  ordinance  of  December  18,  1909;  each  of  which 
was  for  the  purpose  of  settling  a  great  street  railway 
controversy. 

My  primary  purpose  in  publishing  these  as  an  appen- 
dix, is  to  show  the  careful  way  in  which  they  preserve 
the  street  railways  as  permanent  public  improvements 
and  perpetual  investments  and  wholly  eliminate  the  al- 
leged power  of  municipalities  at  the  expiration  of  local 
grants  to  confiscate  or  destroy  street  railway  property. 

But  the  Indiana  statute,  and  the  Chicago  and  Cleve- 
land ordinances  are  also  very  instructive  in  their  details, 
as  they  were  framed  and  agreed  upon  after  protracted 
controversy  and  discussion  and  great  consideration.  They 
deserve  a  careful  reading  by  every  one  called  upon  to 
frame,  recommend,  or  adopt  or  accept,  a  municipal  street 
railway  grant. 

Feed  A.  Baker. 

Detroit,  Mich.,  March  1,  1910. 


X. 


INTRODUCTION. 


Statement  of  a  Case  in  Michigan. 

The  Michigan  constitution  of  1850  contains  the  follow- 
ing provisions: 

"Corporations  may  be  formed  under  general  laws,  but 
shall  not  be  created  by  special  act  except  for  municipal 
purposes.  All  laws  passed  pursuant  to  this  section  may 
be  amended,  altered  or  repealed." 

"No  corporation  except  for  municipal  purposes  or  for 
the  construction  of  railroads,  plank  roads  and  canals 
shall  be  created  for  a  longer  time  than  thirty  years." 

These  provisions  are  significant  in  two  particulars: 
(1)  they  recognize  the  principle  that  the  franchises  of 
corporate  existence  and  to  conduct  a  given  business  as 
a  corporation  are  rights  or  privileges  granted  by  the 
state,  and  not  by  the  county,  township,  village  or  city 
in  which  the  corporation  may  be  located;  (2)  they  also 
recognize  the  fact  that  public  service  corporations,  such 
as  railroad,  plank  road  and  canal  companies  are  organ- 
ized to  construct  permanent  public  improvements,  the 
usefulness  of  which  would  be  much  longer  than  thirty 
years. 

Railroad,  plank  road,  and  canal  companies  were  the 
only  public  service  corporations  known  to  the  people  of 
tJie  state  in  1850,  and  there  can  be  no  doubt  that  if  street 
railways  had  then  been  in  existence,  they  would  have 
been  included  in  the  exceptions. 

As  a  street  car  line  is  in  every  sense  of  the  word  a 
railroad,  the  legislature  could,  under  any  fair  and  reason- 


XI. 

able  construction  of  the  constitutional  provision,  author 
ize  the  formation  of  street  railway  corporations  to  exist 
for  more  than  thirty  years.  The  United  States  Circuit 
Court  of  Appeals  for  the  Sixth  Circuit  has  expressed  an 
opinion  to  the  contrary.  (Detroit,  etc.,  Co.  vs.  Detroit, 
12  C.  G.  A.  365;  64  Fed.  628). 

However,  the  question  is  not  of  very  much  practical 
importance  because  the  street  railroad  laws  of  Michigan 
have  always  limited  the  existence  of  street  railway  cor- 
porations to  thirty  years;  but  this  lias  not  been  done  on 
the  theory  that  street  railways  were  only  to  exist  for 
thirty  years.  Their  permanent  nature  has  never  been 
questioned. 

Under  the  national  bank  act  the  stockholders  of  a 
bank,  are  only  permitted  to  maintain  corporate  succes- 
sion for  twenty  years;  but  that  does  not  signify  that  the 
business  and  good  will  of  the  bank  are  to  be  destroyed  at 
the  end  of  the  twenty  years,  for  the  stockholders,  or  such 
of  them  as  see  fit  to  join  therein,  are  at  liberty  to  organ- 
ize a  new  corporation,  and  take  over  the  assets  and  lia- 
bilities of  the  old  corporation,  the  charter  of  which  has 
expired  or  is  about  to  expire. 

The  twenty'  years  limitation  simply  compels  liquida- 
tion. A  stockholder  can  not  be  forced  to  join  the  new 
corporation.  He  can  compel  those  who  do,  to  make  a 
fair  and  just  liquidation,  if  need  be,  by  a  public  and 
properly  conducted  sale  of  the  assets.  (Mason  vs.  Peuxi- 
hic  Mining  Co.,  133  U.  S.  50.) 

But  that  does  not  necessitate  a  destruction  of  the 
business,  or  of  its  good  will.  These  would  remain  in- 
tact even  on  a   public  sale. 

A  street  railwaj-  corporation  incorporated  for  a  lim- 
ited period,  occupies  a  similar  position,  with   the  addi- 


Xll. 

tional  feature  that  it  maintains  and  operates  a  property 
devoted  to  the  public  use,  and  the  necessity  of  preserv- 
ing tJie  property  and  continuing  the  service,  after  the 
corporate  life  of  the  company  has  expired,  creates  a 
greater  necessity  for  the  organization  of  a  new  corpora- 
tion to  become  its  successor.  The  laws  of  Michigan  per- 
mit this  to  be  done,  and  contemplate  that  it  will  be  done. 
In  1855  the  Michigan  legisulature  passed  the  Train 
(Tram)  railway  act  {Laws  of  1855_,  page  338;  2  C.  L. 
1897,  p.  2027.) 

The  principal  purpose  of  that  act  was  to  provide  tram- 
ways for  the  transportation  of  copper  and  iron  ores,  coal 
and  lumber  from  the  mines  and  mills  of  the  state  to  the 
lakes.  A  toll  of  four  cents  a  mile  for  each  car  and  for 
each  ton  of  ore,  coal  er  lumber  carried,  was  authorized 
{Sec.  13.) 

In  1861  the  act  was  amended  by  the  addition  of  two 
sections  authorizing  the  organization  under  it  of  street 
railway  corporations.  {Laws  of  1861,  p.  12;  2  C.  L. 
1897,  p.  2035.) 

It  was  enacted  that  "no  such  company  or  corporation 
shall  be  authorized  to  construct  a  railway  under  this  act 
through  the  streets  of  any  town  or  city  without  the  con- 
sent of  the  municipal  authorities  of  such  town  or  city 
and  under  such  regulations  and  upon  such  terms  and 
conditions  as  said  authorities  may  from  time  to  time 
prescribe."     {Sec.  34.) 

In  1867  the  following  proviso  was  added  to  Sec.  34: 
"Provided  further  that  after  such  consent  shall  have 
been  given  and  accepted  by  the  company  or  corporation 
to  which  the  same  is  granted,  such  authorities  shall  make 
no  regulations  or  conditions  whereby  the  rights  or  fran- 
chises granted   shall   be  destroyed   or   unreasonably   im- 


Xlll. 

paired  or  said  company  or  corporation  be  deprived  of  the 
right  of  constructing,  maintaining  and  operating  such 
railway  in  the  streets  in  such  consent  and  grant  named 
pursuant  to  the  terms  thereof."     {Laws  of  1867,  p.  257.) 

At  the  same  session  of  the  legislature  an  independent 
street  railway  act  was  passed.  {Id.,  p.  46;  2  C.  L.  1897, 
p.  2057.) 

That  act  provides  for  the  incorporation  of  street  rail- 
way companies,  and  authorizes  them  to  construct  and 
operate  street  railways  on  the  streets  "with  the  consent 
of  the  corporate  authorities  of  the  city  or  village  given 
in  and  by  an  ordinance  or  ordinances  duly  enacted  for 
ih^  purpose  and  under  such  rules,  regulations  and  con- 
ditions as  in  and  by  such  ordinance  or  ordinances  shall 
be  prescribed." 

A  written  acceptance  of  the  terms  and  conditions  is 
required.     {Sec.  13.) 

The  act  further  provides : 

"After  any  city,  village  or  township  shall  have  con- 
sented as  in  this  act  provided,  to  the  construction  and 
maintenance  of  any  street  railways  therein,  or  granted 
any  rights  and  privileges  to  any  such  company,  and  such 
consent  and  grant  have  been  accepted  by  the  company, 
such  township,  city  or  village  shall  not  revoke  such  con- 
sent, nor  deprive  the  company  of  the  rights  and  privileges 
so  conferred."     {Sec.  14.) 

"The  rates  of  toll  or  fare  which  any  street  railway 
company  may  charge  for  the  transportation  of  persons 
or  passengers  over  their  road,  shall  be  established  by 
agreement  between  such  company  and  the  corporate  au- 
thorities of  the  city  or  village  where  the  road  is  located, 
and  shall  not  be  increased  without  consent  of  such  au- 
thorities."    {Sec.  20.) 


XIV. 

The  first  street  railway  grant  by  the  city  of  Detroit 
was  by  an  ordinance  approved  November  24,  1862.  This 
ordinance  was  amended  December  27,  1862,  and  January 
12,  1863,  and  soon  afterwards  it  was  accepted  and  acted 
upon  by  the  corporation  known  as  the  "Detroit  City 
Railway." 

By  section  20,  it  was  stipulated: 

"The  power  and  privileges  conferred  by  the  provisions 
of  tills  ordinance  shall  be  limited  to  thirty  years  from 
the  date  of  its  passage." 

And  it  was  further  stipulated: 

"The  rate  of  fare  for  any  distance  shall  not  exceed 
five  cents  in  any  one  car  or  on  any  one  route  named  in 
this  ordinance,"  etc.     (Sec.  8.) 

Authority  to  make  extensions  and  to  build  new  lines 
was  given  the  Detroit  City  Railway  from  time  to  time, 
and  it  acquired  lines  built  by  other  companies. 

By  an  ordinance  approved  Nov.  14,  1879,  an  extension 
of  the  time  limitation  was  granted  the  Detroit  City  Rail- 
way, by  the  following  stipulation : 

"The  powers  and  privileges  conferred  and  obligations 
imposed  by  the  ordinance  passed  November  24,  1862, 
and  the  amendments  thereto  are  hereby  extended  and 
limited  to  thirty  years  from  tJiis  date."     {Sec.  5.) 

The  thirty  years  expired  November  14,  1909,  and  as  no 
extension  or  new  grant  and  contract  betw^een  the  Detroit 
United  Railway  (which  has  succeeded  to  the  title  of  the 
Detroit  City  Railway)  and  the  city  of  Detroit  has  been 
made  or  entered  into,  the  question  whether  the  street 
railway  company,  since  November  14,  1909,  has  any 
rights  the  city  is  bound  to  respect,  becomes  a  practical 
one. 


XV. 

The  street  railway  routes  concerned  are  the  main,  cen- 
tral lines  of  the  city;  they  constitute  the  back  bones  and 
ribs  of  a  much  larger  system,  and  furnish  the  means  of 
transportation  for  a  city  and  suburban  population  of 
over  500,000  people. 

The  interests  of  the  public  demand  that  the  service 
these  lines  render  shall  not  be  suspended  for  a  single 
4ay  or  hour. 

What  then  are  the  rights  and  obligations  of  the  Detroit 
United  Railway  and  the  city  of  Detroit  in  the  premises? 

Conversely  stated  the  question  is: 

Has  the  city  of  Detroit  the  right,  by  a  resort  to  force 
or  by  legal  proceedings,  to  compel  the  Detroit  United 
Railway  to  cease  the  operation  of  its  railways  on  the 
streets  covered  by  tJie  expired  grants;  or 

Has  the  Detroit  United  Railway  the  right  after  the 
expiration  of  the  tliirty  years  to  remain  in  the  streets 
and  continue  to  ser^e  the  public? 


DURATION  OF  MUNICIPAL  STREET  GRANTS. 

I. 

The  omission  from  the  existing  express  contracts 
of  the  parties  of  any  covenant  on  the  part  of  the 
street  railway  company  to  surrender  possession  at 
the  end  of  the  thirty  years  or  of  any  covenant  on  the 
part  of  the  city  to  permit  a  continuation  of  the  public 
service  after  the  thirty  years  have  expired  makes  the 
question,  whichever  way  it  may  be  decided,  one  of 
implied  contract,  and  the  city  must  rely  on  the  law 
of  implied  contracts,  as  well  as  the  street  railway  com- 
pany. 

Applying  the  law  of  implied  contracts  to  the  grants 
made  to  the  Detroit  City  Railway  in  1862  and  1879 
the  conclusion  is  irresistible  that  the  right  of  the  com- 
pany, its  successors  and  assigns,  to  maintain  and 
operate  its  street  railways  on  the  streets  of  the  city 
extends  beyond  the  designated  period  of  thirty  years. 

All  well  drawn  leases  of  real  estate  for  a  term  of 
years,  by  private  owners,  contain  an  express  covenant  on 
the  part  of  the  tenant  to  surrender  and  yield  up  posses- 
sion of  the  premises  at  the  expiration  of  the  term.  The 
blank  leases  sold  by  Eichmond  &  Backus  of  Detroit,  the 
principal  blank  printers  in  Michigan,  contain  such  a 
clause.  The  tenant  agrees  to  surrender  the  property  at 
the  end  of  the  term  "in  like  condition  as  when  received 
by  him,  reasonable  use  and  wear  thereof  and  damages  by 
the  elements  excepted.'' 


If  a  lease,  either  oral  or  written,  is  made  without  such 
a  covenant,  the  obligation  of  the  tenant  to  surrender 
possession  at  the  end  of  the  term  will  be  implied.  The 
implied  covenant  arises  from  the  rights  attaching  to  the 
private  ownership  of  land,  and  from  the  nature  of  the 
transaction  between  the  parties  when  the  tenancy  is 
created. 

Whether  in  any  contract  there  is  an  implied  covenant 
or  obligation  depends  on  the  subject  matter  and  all  the 
surrounding  facts  and  circumstances. 

This  is  well  illustrated  by  the  case  of  Carpenter  vs. 
United  States,  17  Wall.,  489,  where  it  was  held  that  when 
defendant  has  entered  and  occupied  land  by  permission 
of  the  plaintiff  without  any  express  contract,  the  law  im- 
plies a  promise  on  his  part  to  make  compensation  or  pay 
a  reasonable  rent  for  his  occupation ;  but  if  the  entry  has 
been  made  under  an  agreement  to  purchase,  the  pur- 
chaser is  not  liable  for  rent,  because:  "A  contract  can- 
not arise  by  implication  of  law  under  circumstances  the 
occurrence  of  which  neither  of  the  parties  ever  had  in 
contemplation." 

In  the  Michigan  case  of  Marquette  Houghton  &  On- 
tonagon R.  R.  vs.  Harlow,  37  Mich.,  554,  the  railroad 
compan}^  had  taken  possession  of  Harlow's  land,  and  he 
sued  in  assumpsit  for  use  and  occupation  of  land. 

Campbell,  J.,  for  the  court  said : 

"Harlow  never  expected  to  get  rent  and  never  had  any 
expectation  of  getting  any  settlement  except  for  the 
entire  appropriation  of  the  land.  He  repudiated  any 
rights  in  the  company  to  remain  in  possession.  He  chose 
to  keep  himself  in  an  adverse  position  and  not  under  con- 
tract. There  could  be  no  plainer  denial  of  privity  than 
he  has  given.  It  needs  no  discussion  to  determine  that 
a  party  who  asserts  adverse  rights  cannot  at  the  same 


time  claim  the  existence  of  rights  or  duties  arising  out 
of  a  tenancy  by  contract.     Ward  vs.  Warner,  8  Mich., 

508." 

It  is  plain  that  the  fact  that  the  ordinances  constitut- 
ing the  contract  now  existing  between  the  Detroit  United 
Railway  and  the  City  of  Detroit  contain  no  provision 
fixing  the  rights  of  the  parties  after  the  expiration  of  the 
period  of  thirty  years,  makes  the  case  one  of  implied 
contract. 

If  the  city  claims  it  has  the  right  to  compel  the  com- 
pany to  remove  its  tracks  from  the  streets,  it  can  only 
establish  that  right  by  demonstrating  that  such  was  the 
implied  understanding — ^that  is,  the  city  must  resort  to 
an  implication. 

If  the  company  claims  that  it  has  the  right  in  the 
absence  of  an  extension  or  a  new  agreement,  to  remain 
in  the  streets  and  to  continue  its  service  to  the  public, 
beyond  the  thirty  years,  it  too  must  resort  to  an  impli- 
cation. 

Neither  party  has  any  advantage  over  the  other. 

Whether  the  implied  contract  should  be  held  to  be  the 
one  thing  or  the  other,  depends  on  a  full  and  candid 
consideration  of  the  subject  matter,  the  relations  of  the 
parties  to  each  other,  and  to  the  general  public,  and  all 
the  material  facts  and  circumstances. 

IMPLIED   CONTRACTS. 

The  books  of  the  law  are  full  of  cases  enforcing  im- 
plied contracts,  covenants  and  promises,  but  before  we 
undertake  to  review  the  authorities  it  is  advisable  to  get 
thoroughly  in  mind  the  distinction  which  divides  implied 
contracts  into  two  classes:  (1)  Contracts  implied  in 
fact,  that  is,  actual  contracts,  and  (2)  contracts  implied 


in  law,  or  contracts  imposed  and  created  by  the  law, 
wheire  there  is  no  pretense  that  the  obligor  agreed  or 
intended  to  agree  to  do  or  not  to  do  the  particular  thing 
in  question. 

This  distinction  is  commented  upon  in  a  recent  case  in 
Illinois  {ChudnovsJci  vs.  Eckels,  232  III.,  312). 

The  municipal  court  of  Chicago  had  jurisdiction  in 
"all  actions  on  contracts  express  or  implied,"  and  an 
action  was  brought  in  that  court  on  the  implied  contract 
of  a  street  railway  company  to  carry  safely  passengers 
who  enter  its  cars.  The  jurisdiction  was  sustained,  on 
the  ground  that  there  was  an  actual  contract  arising  from 
the  invitation  of  the  street  railway  company  to  the  public 
to  ride  on  its  cars  and  the  acceptance  of  the  plaintiff  as 
a  passenger.  As  the  company  was  a  common  carrier  and 
a  public  service  corporation  it  was  under  a  legal  obliga- 
tion to  carry  passengers,  and  the  case  is  one  where  there 
was  not  only  an  implied  contract  in  fact,  but  also  an 
implied  contract  in  law,  which  shows  that  legal  obliga- 
tions may  have  an  important  bearing  on  the  question 
whether  the  parties  have  entered  into  an  actual  contract. 

The  court  cited  a  case  in  California  decided  by  Field, 
J.,  when  he  was  one  of  the  judges  of  the  State  Supreme 
Court,  and  a  case  in  the  Supreme  Court  of  the  United 
States  in  which  he  delivered  the  opinion  of  the  court. 
{Argenti  vs.  Francisoo,  16  Cal.,  282;  Steamship  Co.  vs. 
Joliffe,2  Wall,  ^50.) 

Judge  Field  cited  Maines  Ancient  Law,  which  says: 

"The  part  of  Roman  Law  which  has  had  most  exten- 
sive influence  on  foreign  subjects  of  inquiry  has  been  the 
law  of  Obligation,  or,  w^hat  comes  nearly  to  the  same 
thing,  of  Contract  and  Delict.  The  Romans  themselves 
were  not  unaware  of  the  offices  which  the  copious  and 


malleable  terminology  belonging  to  this  part  of  their 
system  might  be  made  to  discharge,  and  that  is  proved  by 
their  employment  of  the  peculiar  adjunct  Quasi  in  sucli 
expressions  as  Quasi-contract  and  Quasi-Delict.  "Quasi," 
so  used,  is  exclusively  a  term  of  classification.  It  has 
been  usual  with  English  critics  to  identify  the  quasi- 
contracts  with  implied  contracts,  but  this  is  an  error, 
for  implied  contracts  are  true  contracts,  which  quasi- 
contracts  are  not.  In  implied  contracts,  acts  and  cir- 
cumstances are  the  symbols  of  the  same  ingredients 
which  are  symbolized  in  express  contracts,  by  words; 
and  whether  a  man  employs  one  set  of  symbols  or  the 
other  must  be  a  matter  of  indifference  so  far  as  concerns 
the  theory  of  agreement.  But  a  quasi  contract  is  not  a 
contract  at  all.  The  commonest  sample  of  the  class  is 
the  relation  subsisting  between  two  persons,  one  of  whom 
has  paid  money  to  the  other  through  mistake.  The  law, 
consulting  the  interests  of  morality,  imposes  an  obliga- 
tion on  the  receiver  to  refund,  but  the  very  nature  of  the 
transaction  indicates  that  it  is  not  a  contract,  inasmuch 
as  the  convention,  the  most  essential  ingredient  of  con- 
tract, is  wanting.  This  word  "quasi,"  prefixed  to  a  term 
of  the  Roman  law,  implies  that  the  conception  to  which 
it  serves  as  an  index  is  connected  with  the  conception 
with  which  the  comparison  is  instituted  by  a  strong 
superficial  analogy  or  resemblance.  It  does  not  denote 
that  the  two  conceptions  are  the  same,  or  that  they 
belong  to  the  same  genus.  On  the  contrary,  it  negatives 
the  notion  of  an  identity  between  them;  but  it  points 
out  that  they  are  sufficiently  similar  for  one  to  be  classed 
as  the  sequel  of  the  other,  and  that  the  phraseology 
taken  from  one  department  of  law  maj'  be  transferred  to 
the  other,  and  employed  without  violent  straining  in  the 
statement  of  rules  which  would  otherwise  be  imperfectly 
expressed." 


6 

In  a  case  in  Massachusetts  the  court  said : 

"A  contract  may  be  expressly  made,  or  a  contract  may 
be  inferred  or  implied  when  it  is  found  that  there  is  an 
agreement  of  the  parties  and  an  intention  to  create  a 
contract,  although  that  intention  has  not  been  expressed 
in  terms  of  contract;  in  either  case  there  is  an  actual 
contract.  But  a  contract  is  sometimes  said  to  be  implied 
when  there  is  no  intention  to  create  a  contract,  and  no 
agreement  of  the  parties,  but  the  law  has  imposed  an 
obligation  which  is  enforced  as  if  it  were  an  obligation 
arising  ex  contractu.  In  such  a  case  there  is  not  a  con- 
tract, and'  the  obligation  arises  ex  lege.  {Milford  vs. 
Commonwealth,  144  Mass.,  64. ) 

In  that  case  jurisdiction  was  given  to  the  Superior 
Court  "of  all  claims  against  the  commonwealth  which  are 
founded  on  contract  for  the  payment  of  money."  And 
their  statute  provided  that  the  commonwealth  should 
reimburse  a  city  or  town  for  the  support  of  a  person  in- 
fected with  smallpox  or  other  disease  dangerous  to  the 
public  health;  and  the  question  was  whether  this  statu- 
tory liability  was  a  claim  founded  on  contract. 

The  state  not  being  subject  to  action,  except  with  its 
own  consent,  the  court  was  of  the  opinion  that  it  was 
not  the  intention  to  give  the  superior  court  jurisdiction 
over  obligations  for  the  payment  of  money  imposed  by 
statute  upon  the  commonwealth.  In  other  words,  the 
court  held  that  the  statute  conferring  jurisdiction  on  the 
superior  court  had  reference  to  actual  contracts,  as  dis- 
tinguished from  obligations  imposed  by  the  law. 

Except  as  it  may  affect  the  remedies  open  to  the 
obligee,  it  can  be  of  little  consequence  to  the  obligor 
whether  his  obligation  is  regarded  as  an  implied  contract, 
ex  contractu,  or  an  implied  contract  ex  lege,  for  whether 
it  is  the  one  or  the  other,  he  is  equally  bound.     Hence 


jt  is  that  the  most  learned  law  writers  and'  judges  have 
not  in  many  instances  attempted  to  classify  implied  con- 
tracts, but  have  treated  them  all  as  belonging  to  one 
general  class. 

Blackstone,  in  his  Commentaries,  3  Vol.,  p.  158,  after 
defining  express  contracts,  continues  as  follows: 

"From  these  express  contracts  the  transition  is  easy 
to  those  that  are  only  implied  by  law,  which  are  such  as 
reason  and  justice  dictate,  and  which,  therefore,  the  law 
presumes  that  every  man  has  contracted  to  perform; 
and  upon  this  presumption  makes  him  answerable  to  such 
persons  as  suffer  by  his  non-performance." 

He  then  considers  the  class  of  implied  contracts  found- 
ed' upon  a  person's  obligations  to  society  and  to  the 
government  under  which  he  lives.  He  then  says:  "A 
second  class  of  implied  contracts  are  such  as  do  not 
arise  from  the  express  determination  of  any  court,  or 
the  positive  direction  of  any  statute;  but  from  natural 
reason  and  the  just  construction  of  law.  Which  class 
extends  to  all  presumptive  undertakings  or  assumpsits; 
which,  though  never  perhaps  actually  made,  yet  con- 
stantly arise  from  this  general  implication  and  intend- 
ment of  the  courts  of  judicature,  that  every  man  hath 
engaged  to  perform  what  his  duty  or  justice  requires." 

Chitty  on  Contracts,  p.  18,  adopts  Blackstone's  defini- 
tion of  implied  contracts. 

2  Parsons  on  Contracts,  p.  575 : 

"The  general  ground  of  a  legal  implication  is  that  the 
parties  to  the  contract  would  have  expressed  that  which 
the  law  implies  had  they  thought  of  it,  or  had  they  not 
supposed  it  was  unnecessary  to  speak  of  it  because  the 
law  provided  for  it." 


8 

Addison  on  Contracts,  p.  23 : 

"Implied  contracts  have  sometimes  been  divided  into 
inferred  contracts,  implied  contracts  properly  so  called, 
and  constructive  contracts.  A  contract  is  said  to  be 
inferred  where  the  intention  of  the  parties  is  not  ex- 
pressed in  words,  but  may  be  gathered  from  their  acts 
and  surrounding  circumstances.  In  these  cases  the  law 
enforces  what  it  deems  to  have  been  the  intention  of  the 
parties." 

"It  not  infrequently  happens  that  in  the  course  of  car- 
rying out  a  contract  circumstances  arise  which  have  not 
been  contemplated  by  the  parties,  and  consequently 
where  no  intention  has  been  expressed  by  them,  or  can 
be  inferred  from  their  acts.  In  such  cases  the  law  pre- 
scribes their  respective  rights  and  liabilities  according 
to  the  dictates  of  justice — that  is,  of  general  expediency, 
according  to  what  it  is  presumed  their  intention  would 
have  been  had  they  had  those  circumstances  in  their 
consideration  when  they  made  the  contract." 

Chief  Justice  Marshall,  in  Ogden  vs.  Saunders,  12 
Wheat.,  214,  said: 

"A  great  mass  of  human  transactions  depends  upon 
implied  contracts;  upon  contracts  which  are  not  written, 
but  which  grow  out  of  the  acts  of  the  parties.  In  such 
cases  the  parties  are  supposed  to  have  made  those  stipu- 
lations which,  as  honest,  fair  and  just  men,  they  ought 
to  have  made.  When  the  law  assumes  that  they  have 
made  these  stipulations,  it  does  not  vary  their  contract 
or  introduce  new  terms  into  it,  but  declares  that  certain 
acts,  unexplained  by  compact,  impose  certain  duties  and 
that  the  parties  had  stipulated  for  their  performance." 

The  Supreme  Court  of  Iowa,  recently,  Ottumwa,  etc., 
vs.  Manchester,  115  N.  W.,  911,  in  a  case  calling  for  an 
application  of  the  law  of  implied  contracts,  said: 


"A  contract  or  promise  to  do  a  certain  thing  may,  of 
course,  be  implied  from  circumstances  or  from  the  con- 
duct of  the  party  sought  to  be  charged.  Implied  con- 
tracts are  such  as  reason  and  justice  dictate,  and  which, 
therefore,  the  law  presumes  that  every  person  under- 
takes to  perform.'' 

In  Turner  vs.  Jones,  1  Lansing  {N.  Y.),  147,  148,  Mar- 
vin, P.  J.,  said: 

"But  in  the  absence  of  an  express  promise,  I  under- 
stand it  to  be  a  general  principle  to  imply  a  promise  if 
the  facts  are  such  as  in  equity  and  good  conscience  re- 
quire a  promise.  Promises  are  implied  in  a  large  por- 
tion of  the  transactions  of  life." 

In  Brackett  vs.  Norton,  4  Conn.,  517,  524,  Hosmer, 
C.  J.,  cites  Blackstone's  definition  of  implied  contracts, 
that  they  are  such  as  reason  and  justice  dictate,  and  then 
says : 

"Upon  this  principle  the  court  may,  and  often  does 
presume,  the  extent  of  an  agency  from  the  nature  of  the 
case;  and  hence  a  contract,  either  necessary  or  highly 
expedient  in  the  attainment  of  a  given  object,  is  reason- 
ably to  be  Inferred." 

In  Webster  vs.  TJpton,  91  JJ.  S.,  65,  72,  the  court  held 
that  a  transferee  of  stock  in  an  incorporated  company  is 
liable  for  calls  of  the  unpaid  portion  of  his  stock,  made 
after  he  has  been  accepted  by  the  company  as  a  stock- 
holder, and  after  his  name  has  been  registered  as  a 
stockholder. 

The  court  held  that  there  was  a  necessary  implication 
that  such  transferee  would  complete  tlie  payment  of  all 
that  was  unpaid  of  the  sliares  lie  hold  whenever  it  should 
be  demanded. 


10 

"To  constitute  a  promise  binding  in  law,  no  form  of 
words  is  necessary.  An  implied  promise  is  proved  by 
circumstantial  evidence;  by  proof  of  circumstances  that 
show  the  party  intended  to  assume  an  obligation.  A 
party  may  assume  an  obligation'  by  putting  himself  into 
a  position  which  requires  the  performance  of  duties." 

Hunter  vs.  New  York  and  Saginaw  8<>lar  Salt  Com- 
pany, 14  Michigan,  90,  is  a  case  where  the  defendant,  the 
salt  company,  contracted  for  the  purchase  of  two  million 
feet  of  lumber  from  Babcock  and  Bliss,  and  a  like  quan- 
tity from  F.  P.  Sears  &  Company,  and  then  entered  into 
a  contract  with  Hunter,  the  plaintiff,  for  the  removal  of 
the  lumber  to  the  docks  of  the  defendant,  where  the  lum- 
ber was  to  be  used  by  one  Burrell,  who  had  the  contract 
for  constructing  solar  salt  work^  for  defendant.  Bab- 
cock and  Bliss  and  F.  P.  Sears  &  Co.  did  not  saw  and 
deliver  on  their  docks  the  full  amount  of  lumber.  Hunter 
removed  to  the  docks  of  the  salt  company  all  the  lumber 
that  was  sawed  and  delivered,  and  was  paid  the  contract 
price  of  |1.00  per  thousand  feet.  He  then  brought  an 
action  to  recover  damages  from  the  salt  company  for  not 
having  been  permitted  to  remove  the  whole  amount  of 
lumber  and  for  having  been  prevented  from  earning  the 
contract  price  of  fl.OO  per  thousand  for  that  portion  of 
the  lumber  not  furnished  at  all. 

The  theory  of  the  plaintiff's  action  was  that  the  de- 
fendant was  bound  to  provide  the  whole  amount  of  lum- 
ber, and  that  it  guaranteed  the  performance  by  Babcock 
an'd  Bliss  and  by  F.  P.  Sears  &  Company  of  their  con- 
tracts. The  court,  in  an  opinion  by  Christiancy,  J.,  was 
of  a  contrary  opinion. 

He  said: 

"Taking  the  whole  contract  together,  it  is  clearly  im- 
plied that  these  stipulations  are  subject  to  the  implied 


11 

condition  that  Babcock  and  Bliss  and  Sears  &  Company 
should  first  saw  and  deliver  the  lumber  under  their 
contracts." 

In  Ex  parte  Ford,  In  re  Chappell,  16  Q.  B.  Div.,  305, 
a  second  mortgagee,  in  order  to  enable  the  mortgagor  to 
obtain  a  further  advance  from  the  first  mortgagee,  agreed 
to  postpone  his  mortgage  and  make  it  subordinate  to  the 
fresh  advance.  The  mortgagor  became  bankrupt,  and 
when  the  property  was  afterwards  sold  by  the  first  mort- 
gagee, the  proceeds  were  insufficient  to  pay  the  whole 
amount  due  to  him,  though  they  did  exceed  the  amount 
originally  secured  by  the  first  mortgage. 

Held,  that  the  second  mortgagee  was  entitled  to  prove 
in  the  bankruptcy  for  the  amount  which  he  would  have 
received  out  of  the  proceeds  of  the  sale  if  he  had  not  con- 
sented to  postpone  his  charge,  on  the  ground  that  the 
court  was  entitled  to  infer  an  implied  promise  by  the 
bankrupt  to  indemnify  the  second  mortgagee  against  any 
loss  which  might  result  from  the  postponement  of  his 
charge. 

"Lord  Esher.  M.  R.  It  seems  to  me  that  whenever 
circumstances  arise  in  the  ordinary  business  of  life  in 
which,  if  two  persons  were  ordinarily  honest  and  careful, 
the  one  of  them  would  make  a  promise  to  the  other,  it 
may  properly  be  inferred'  that  both  of  them  understood 
that  such  a  promise  was  given  and  accepted.  When,  in 
the  present  case,  one  brother,  at  the  request  of  the  other, 
gave  up  and  postponed  a  right  which  he  had,  from  which 
postponement  it  was  very  probable  that  a  loss  might 
result  to  him,  it  seems  to  me  that  ordinary  people  would 
have  intended  that  the  brother,  for  whose  benefit  the 
postponement  was  made,  should  promise  to  indemnify 
the  other  against  any  resulting  loss,     I  think  there  is 


12 

evidence  from  which  the  proper  tribunal  might  infer 
that  such  a  promise  was  given.  The  proper  tribunal  has 
drawn  that  inference,  and  I  see  no  reason  for  interfering 
with  their  conclusion. 

"Cotton,  L.  J.  I  am  of  the  same  opinion.  The  point 
is  a  nice  one.  The  brother,  at  the  request  of  the  bank- 
rupt, agreed  to  deal  with  his  security  in  such  a  way  that 
it  became  liable  to  be  defeated.  I  do  not  see  that  there 
is  any  evidence  that  Dr.  Chappell  intended  to  make  a 
present  of  his  security  to  his  brothe;p.  I  think,  therefore, 
that  the  proper  inference  to  draw  is  that  it  was  intended 
that  he  should  be  indemnified  by  his  brother  in  case  any 
loss  should  result  to  him." 

"Lindley,  L.  J.  I  am  of  the  same  opinion.  No  doubt 
there  is  at  first  sight  a  little  difficulty  in  the  case;  but, 
in  substance,  Dr.  Chappell's  interest  in  the  property  has 
been  applied  in  paying  his  brother's  debt,  and  it  seems 
to  me  that  there  is  good  ground  for  inferring  a  promise 
on  the  part  of  his  brother  to  indemnify  him.  It  is  said 
that  this  promise  ought  not  to  be  implied,  because  the 
deed  which  was  executed  at  the  time  contains  no  provi- 
sion for  indemnity,  but  that  deed  was  executed  for  a 
limited  purpose,  viz :  the  postponement  of  Dr.  Chappell's 
security,  and  it  appears  to  me  quite  consistent  with  the 
deed  that  a  promise  to  indemnify  him  should  be  implied.'' 

Genet  vs.  Delaware  &  Hudson  Canal  Co.,  136  ^'.  Y., 
593,  608,  involved  the  construction  of  an  agreement  to 
work  a  coal  mine  and  pay  Mrs.  Genet,  the  owner,  a  roy- 
alty. The  mine  had  three  veins,  and  the  defendant  negli- 
gently mined  the  middle  vein  and  left  such  insufficient 
support  that  the  rock,  earth  and  coal  above  fell  down 
into  and  ruined  the  mine  and  the  whole  body  of  coal 
was  lost. 

Held,  that  although  there  was  no  express  stipulation 


13 

in  the  contract  against  such  negligent  destruction  of  the 
mine,  it  was  to  be  implied,  and  an  action  could  be  main- 
tained upon  the  implied  promise.  At  page  608  the  court 
said: 

"I  know  very  well  that  implied  promises  are  to  be 
cautiously  and  not  hastily  raised.  What  they  are  was 
very  well  stated  in  Scranton  vs.  Booth  (29  Barb.,  174), 
in  Allamon  vs.  Mayo?'  of  Albany,  (43  id.,  36),  and  in 
Booth  vs.  Clevelamd  Rolling  Mills  Co.  (6  Hun.,  597). 
They  always  exist  where  equity  and  justice  require  the 
party  to  do  or  to  refrain  from  doing  the  thing  in  ques- 
tion; where  the  covenant  on  one  side  involves  same  cor- 
responding obligation  on  the  other;  where  by  the  rela- 
tions of  the  parties  and  the  subject-matter  of  the  contract 
a  duty  is  owing  by  one  not  expressly  bound  by  the  con- 
tract to  the  other  party  in  reference  to  the  subject  of  it. 
In  this  court  we  have  thrown  some  safeguards  about  the 
doctrine  to  secure  its  prudent  application,  and  have  said 
that  a  promise  can  be  implied  only  where  we  may  right- 
fully assume  that  it  would  have  been  made  if  attention 
had  been  drawn  to  it  {Dermott  vs.  The  State.  99  N.  Y., 
101),  and  that  it  is  to  be  raised  only  to  enforce  a  mani- 
fest equity  or  to  reach  a  result  which  the  unequivocal 
acts  of  the  parties  indicate  that  they  intended  to  effect. 
{King  vs.  Leighton,  100  N.  Y.,  386.) 

"It  seems  to  me  that  within  the  rule  of  these  cases  the 
plaintiff  has  a  right  of  action  upon  the  implied  promise 
of  the  defendant  not  wilfully  or  negligenth-  to  incapaci- 
tate itself  from  taking  out  more  than  the  minimum  (quan- 
tity of  coal.  The  acceptanx^e  of  a  minimum  ro^-alty  for 
the  safety  and  benefit  of  the  lessees  equally  with  that  of 
the  lessor,  when  a  larger  one  was  contemplated  on  both 
sides,  involves  an  obligation  of  the  lessee  not  wilfully  or 
negligently    to    prevent    the    expected    accruing    of    the 


14 

greater  royalty.  For,  examine  the  situation  at  the  mak- 
ing of  the  contract.  The  plaintiff  owned  a  tract  of  coal 
land,  the  veins  under  which  held  about  four  millions  of 
tons,  which,  at  twenty  thousand  tons  a  year,  it  would 
take  two  hundred  years  to  exhaust,  and  worth  at  the 
small  price  of  this  contract,  above  the  mining  and  mar- 
keting and  the  operator's  profits,  half  a  million  of  dol- 
lars. She  desired  to  utilize  so  valuable  a  property.  Un- 
able or  unwilling  to  plant  a  colliery  upon  the  land,  she 
turns  to  the  defendant.  That  is  a  rich  and  powerful 
corporation  engaged  both  in  mining  and  transportation. 
It  had  mines  adjacent,  adequate  and  sufficient  plants, 
large  capital,  numerous  customers,  complete  control  of 
transportation.  The  parties  sat  down  to  agree.  The 
rate  per  ton  as  royalty  and  the  quality  and  inspection  of 
the  coal  were  settled.  Then  came  the  vital  inquiry  of 
how  much  the  company  would  bind  itself  to  mine.  It 
said  twenty  thousand  tons  per  year.  Of  course  it  pro- 
X)osed  and  expected  to  mine  much  more  than  that,  and 
its  own  business  interest  would  impel  it  to  mine  more, 
but  it  Avould  not  be  bound  for  more  than  twenty  thousand 
tons.  Imagine  Mrs.  Genet  reflecting  on  the  proposition. 
As  an  offer  to  mine  twenty  thousand  tons  per  year,  and 
no  more,  she  would  instantly  have  refused  it.  A  contract 
to  run  for  two  hundred  years  was  not  to  be  endured,  but 
as  an  offer  to  mine  at  least  twenty  thousand  tons  per 
year,  and  as  much  more  as  the  company,  with  due  regard 
to  its  business  interests  and  convenience,  would  take  out, 
the  offer  was  better  and  not  to  be  curtly  rejected.  It 
would  be  taking  a  chance,  yes;  but  business  largely  con- 
sists in  taking  chances  more  or  less  hopeful  or  perilous. 
Mrs.  Genet  studies  this  chance.  It  involves  within  its 
possibilities  the  chief  and  principal  and  only  tolerable 
consideration  of  her  bargain.  She  measures  that  chance 
narrowly.     She  reasons:  there  is  the  coal;   I   know   it. 


15 

I  am  sure  of  its  quality.  These  men  ^^-ill  want  it;  to  get 
out  the  twenty  thousand  tons  they  will  need  to  Sfink  a 
shaft,  to  put  up  pumps,  to  establish  a  plant.  Having 
done  so  much,  their  own  interest  will  impel  them  not  to 
stop  at  the  minimum;  they  never  will  stop  there,  and  I 
will  take  the  chance.  Suppose  somebody  had  said  to  her 
they  may  wilfully  or  negligently  destroy  your  mine,  and, 
with  her  attention  drawn  to  that  suggestion,  she  had 
asked  the  company  to  agree  that  it  would  not  do  that, 
is  there  any  doubt  that  it  would  have  so  promised,  or 
that  if  it  deliberately  refused,  that  Mrs.  Genet  would 
have  declined  a  contract  with  such  a  destructive  possi- 
bility within  its  admitted  scope?  But  neither  party 
thought  of  it;  both  would  have  deemed  it  an  absurd  sug- 
gestion. There  is  not  the  least  doubt  of  the  manner  in 
which  Mrs.  Genet  viewed  the  chance  offered  to  her,  of 
the  measure  which  she  took  of  it,  of  its  boundaries  in  her 
mind,  nor  that  the  company  which  held  it  out  to  her 
knew  how  she  regarded  it  and  understood  it  in  the  same 
way  on  its  part.  The  equity  of  an  implied  promise  is 
strong  and  clear.  Good  faith,  honest  dealing,  business 
candor  and  fairness  require  that  this  contract  should  be 
enforced  in  the  sense  and  with  the  meaning  which  was  in 
the  mind  of  both  parties  at  the  time  of  its  execution. 
The  mine  which  was  to  be  exhausted  and  paid  for  as 
exhausted  is  today  as  much  exhausted  as  if  every  ton  of 
coal  had  been  taken  out  and  sold.  To  the  plaintiff  there 
is  no  difference.  In  either  event  the  coal  is  gone;  and 
to  say  that  she  shall  be  paid  for  it  at  the  annual  rate  of 
twenty-five  hundred  dollars  a  year  for  two  hundred 
years  is  to  put  ujwn  her  a  contract  which  she  never  made 
and  never  dreamed  of  making,  and  which  never  entered 
the  mind  of  the  defendant  itself  until  the  "squeeze"  in 
the  mine  suggested  an  equally  destructive  pressure  of 
literal  construction." 


IG 

The  foregoing  was  quoted,  from  and  followed  in  a  later 
case  {Wilson  vs.  Mech  Orguinette  Co.,  170  N.  Y.,  550). 

Another  case  (Creamer  vs.  Met.,  etc.,  Co.,  120  App. 
Div.,  422,  429). 

A  contract  to  receive  milk  at  a  factory  and  manufac- 
ture it  into  butter  and  cheese  was  held  subject  to  the 
implied  condition  that  the  factory  remained  in  existence 
(Steioart  vs.  Stone,  127  N.  Y.,  500,  507). 

A  railroad  construction  contract  provided  that  the 
contractors  should  not  sub-contract  any  part  of  the  work 
without  the  consent  of  the  railway  company. 

Held,  that  a  sub-contract  let  without  such  consent  was 
subject  to  the  implied  condition,  that  if  the  railway  com- 
pany should  interfere,  the  sub-contractor  should  be  ex- 
cused from  further  performance  and  the  contractor  re- 
leased from  all  liabilit}'  thereafter  accruing  {Dalan  vs. 
Rogers,  149  N.  Y.,  489). 

If  on  a  contract  for  the  sale  of  personal  property  the 
title  has  not  passed,  and  the  property  is  destroyed  by 
fire,  the  loss  falls  on  the  vendor;  but  he  is  released  from 
his  contract  to  sell  and  deliver  because  of  the  impli^ 
condition,  that  the  property  sold  should  continue  in 
existence  until  the  sale  was  complete  {Dexter  vs.  Mor- 
ton, 4:7  N.  Y.,  62). 

Contracts  for  personal  services  are  subject  to  the  im- 
plied condition  that  the  person  shall  be  able,  at  the  time 
appointed,  to  perform  them;  and  if  he  dies  or  without 
fault  on  the  part  of  the  covenanter  becomes  disabled,  the 
obligation  to  perform  is  extinguished.  This  is  so  well 
settled  by  authority  that  it  is  unnecessary  to  do  more 
than  refer  to  a  few  of  the  authorities  directly  in  point 


17 

(People  vs.  Manning^  8  Cow.,  297;  Jones  us.  Judd,  4  1^. 
Y.,  411;  Clark  vs.  Gillhert,  26  2V.  Y.,  279;  W<Afe  vs. 
Howes,  24  Barh.,  174,  666;  Orcw/  i?s.  Murray,  3  J.  O.  i?., 
167;  Robinson  vs.  Davison  L.  R.,  6  Exch.,  268). 

In  Meyer  vs.  Richards,  163  C/.  &.,  385,  the  defendant 
sold  to  the  plaintiff  thirteen  bonds  of  the  State  of  Louisi^ 
ana  for  |8,383.75.  As  a  matter  of  fact,  the  bonds  had 
been  fraudulently  issued  by  the  state  treasurer,  who  put 
them  on  the  market  surreptitiously  and  without  author- 
ity, and  they  were  void. 

Held,  that  under  the  civil  law  which  prevails  in  Louisi- 
ana and  the  common  law  of  England  and  the  United 
States,  there  was  an  implied  warranty  by  the  vendor  of 
the  existence  and  identity  of  the  thing  sold,  and  that  the 
plaintiff  was  entitled  to  recover. 

The  very  learned  opinion  of  the  court  by  Mr,  Justice 
White,  in  which  he  made  a  most  careful  examination  of 
both  the  civil  and  common  law,  concludes  as  follows: 

"In  passing,  however,  it  is  worthy  of  note  that  whilst 
the  civil  law  enforces  in  the  contract  of  sale  generally 
the  broadest  obligation  of  warranty,  it  has  so  narrowed 
it,  when  dealing  with  credits  and  incorporeal  rights,  as 
to  confine  it  to  the  title  of  the  seller  and  to  the  existence 
of  the  credit  sold,  and  exconverso,  the  common  law, 
which  restricts  warranty  within  a  narrow  compass,  virtu- 
ally imposes  the  same  duty  by  broadening  the  warranty 
as  regards  personal  property  so  as  to  impose  the  obliga- 
tion on  the  vendor  to  deliver  the  thing  sold  as  a  condi- 
tion of  the  principal  contract  or  by  implication  of  war- 
ranty as  to  the  identity  of  the  thing  sold.  By  these 
processes  of  reasoning  the  two  great  systems,  whilst  ap- 
parently divergent  in  principle,  practically  work  sub- 
stantially to  the  same  salutary  conclusions." 


18 

In  West  River  Bridge  Co.  vs.  Dix,  6  How.,  508,  the 
court,  at  page  532,  said: 

"But  into  all  contracts,  whether  made  between  states 
and  individuals  or  between  individuals  only,  there  enter 
conditions  which  arise  not  out  of  the  literal  terms  of  the 
contract  itself;  they  are  superinduced'  by  the  pre-existing 
and  higher  authority  of  the  laws  of  nature,  of  nations,  or 
of  the  community  to  which  the  parties  belong;  they  are 
always  presumed,  and  must  be  presumed  to  be  known 
and  recognized  by  all,  are  binding  upon  all,  and  need 
ever,  therefore,  be  carried  into  express  stipulation,  for  this 
could  add  nothing  to  their  force.  Every  contract  is  made 
in  subordination  to  them,  and  must  yield  to  their  control, 
as  conditions  inherent  and  paramount,  wherever  a  neces- 
sity for  their  execution  shall  occur." 

United  States  vs.  Speed,  8  Wall.,  77:  The  government 
entered  into  a  contract  with  the  plaintiff  to  slaughter  and 
pack  50,000  live  hogs  for  it,  the  government  to  furnish 
the  hogs,  tJie  cooperage,  salt  and  other  necessary  materials. 
The  government  furnished  17,132  hogs,  which  w^ere  killed 
and  packed,  and  this  service  paid  for;  and  failed  to  fur- 
nish more.  The  plaintiff  sued  in  the  court  of  claims  for 
damages  and  recovered  a  judgment  for  $19,720.80,  which 
was  affirmed  by  the  Supreme  Court. 

Justice  Miller,  for  the  Court,  said : 

"Without  entering  into  a  discussion  of  the  general 
doctrine  of  the  implication  of  mutual  covenants,  we  deem 
it  sufficient  to  say  that  where,  as  in  this  case,  the  obliga- 
tion of  plaintiffs  requires  an  expenditure  of  a  large  sum 
in  preparation  to  enable  them  to  perform  it,  and  a  con- 
tinuous readiness  to  perform,  the  law  implies  a  duty  in 
the  other  party  to  do  whatever  is  necessary  for  him  to  do 
to  enable  plaintiffs  to  comply  with  their  promise  or  cov- 
enant.   But  the  last  article  of  the  agreement  seems  to  be 


19 

an  express  promise  to  furnish  all  the  hogs  mentioned  in 
the  contract." 

The  foregoing  review  of  some  of  the  very-  large  number 
of  decisions  concerning  actual  implied  contracts,  to  be 
found  in  the  law  reports,  are  sufficient  to  give  us  correct 
Information  of  the  principles  involved  and  of  the  mental 
processes  of  the  learned  judges,  in  upholding  and  enforc- 
ing implied  obligations. 

Implied  meanings  arising  out  of  express  contracts,  or 
from  the  acts  and  conduct  of  the  parties,  are  one  of  the 
most  important  elements  in  the  law  of  contracts,  without 
which  there  would  be  a  vacuum  in  the  law  and  a  truly 
chaotic  condition,  in  every  case  requiring  a  determination 
of  tie  rights  of  the  parties  to  a  contract. 

This  is  also  true  in  the  interpretation  of  constitutions, 
statutes,  and  ordinances,  including  legislative  grants  of 
corporate  rights  and  franchises. 


IMPLIED  CONTKAOTS  ARISING  FROM  CON- 
TRACTUAL RELATIONS  COUPLED  WITH  A 
DUTY  OR  OBLIGATION  IMPOSED  BY  LAW. 

It  bas  always  been  the  law  that  in  the  absence  of  an 
express  contract  on  the  subject,  a  common  carrier  is  liable 
in  assumpsit  on  his  implied  contract,  or  in  tort  on  his 
legal  duty  to  carry  safely  the  goods  or  passengers  tend^ered 
to  him  for  transportation. 

Joseph  Chitty,  writing  in  1808,  said  that  the  action 
of  assumpsit  lies  "against  attorneys  and  solicitors,  wharf- 
ingers, surgeons,  inn-keepers,  carriers  and  other  bailees, 
for  neglect  or  breach  of  contract"  ( 1  Chitty  mi  Pleadings, 
102). 


20 

And  further  on  at  page  134 : 

"And  though  we  have  seen  that  assumpsit  is  the  usual 
remedy  for  neglect  or  breach  of  duty  against  bailees;  as 
against  carriers,  wharfingers,  and  others  having  the  use 
or  care  of  personal  projverty,  whose  liability  is  founded 
on  the  common  law  as  well  as  on  the  contract;  yet  it  is 
clear  that  they  are  also  liable  in  case  for  an  injury  re- 
sulting from  their  neglect  or  breach  of  dnity  in  the  course 
of  their  employment.  For  any  misfeasance  by  a  party  in 
a  trade  which  he  professes,  the  law  gives  an  action  upon 
the  case  to  the  party  grieved  against  him;  as  if  a  smith 
in  shoeing  my  horse  prick  him,  and  other  like  cases.  And 
it  seems  that  although  there  be  an  express  contract,  still 
if  a  common  law  duty  results  from  the  facts,  the  party 
may  be  sued  in  tort  for  any  neglect  or  misfeasance  in  the 
execution  of  the  contract." 

The  best  general  statement  of  the  law  on  the  subject 
I  have  been  able  to  find  is  in  1  Cooley  on  Torts,  103,  106. 

In  a  note  a  quotaition  is  made  from  the  opinion  of  the 
court  by  Finch,  J.,  in  Rich  vs.  New  York,  etc.,  Co.,  87 
N.  Y.,  382. 

We  quote  the  following: 

"It  may  be  granted  that  an  omission  to  perform  a  con- 
tract obligation  is  never  a  tort,  unless  that  omission  is  also 
an  omission  of  legal  duty.  But  such  legal  duty  may  arise, 
not  merely  out  of  certain  relations  of  trust  and  confidence, 
inherent  in  the  nature  of  the  contract  itself,  as  in  the 
cases  referred'  to  in  respondent's  argument,  but  may  spring 
from  extraneous  circumstances,  not  constituting  elements 
of  the  contract  as  such,  although  connected  with  and  de- 
pendent upon  it,  and  born  of  that  wider  range  of  legal 
duty  which  is  due  from  every  man  to  his  fellow,  to  re- 
spect his  rights  of  property  and  person,  and  retrain  from 


21 

invading  them  by  force  or  fraud.  It  has  been  well  said 
thait  the  liability  to  make  reparation  for  an  injury  rests 
not  upon  the  consideration  of  any  reciprocal  obligation, 
but  upon  an  original  moral  duty  enjoined  upon  every 
person  so  to  conduct  himself,  or  exercise  his  own  rights 
as  not  to  injure  another  [Keriohacker  vs.  C.  C.  d  C.  R.  R. 
Co.,  S  Ohio  St.,  188).  Whatever  its  origin,  such  legal 
duty  is  uniformly  recognized,  and  has  been  constantly 
applied  as  the  foundation  of  actions  for  wrongs;  and  it 
rests  upon  and  grows  out  of  the  relations  which  men 
bear  to  each  other  in  the  framework  of  organized  society. 
It  is  then  doubtless  true  that  a  mere  contract  obligation 
may  estaWish  no  relation  out  of  which  a  separate  or  spe- 
cific legal  duty  arises,  and  yet  extraneous  circumstances 
and  conditions  in  connection  with  it  may  establish  such 
a  relation  as  to  make  its  performance  a  legal  duty,  and 
its  omission  a  wrong  to  be  redressed.  The  duty  and  the 
tort  gTow  out  of  the  entire  range  of  facts  of  which  the 
breach  of  the  contract  was  but  one.  The  whole  doctrine 
is  accurately  and  concisely  stated  in  1  Chit.  PL,  135,  that 
"if  a  common-law  duty  result  from  the  facts  the  party 
may  be  ^uedi  in  tort  for  any  negligence  or  misfeasance  in 
the  execution  of  the  contract." 

In  Fiquet  vs.  Allison,  12  Mich.,  328,  crops  had  been 
put  in  on  the  defendant's  land  on  shares.  The  tenant 
mortgaged  the  crops  while  they  w^ere  gro\\ing  to  the 
plaintiffs,  who  caused  them  to  be  harvested,  when  the 
defendant  drew  them  off,  threshed  the  grain  and  put  it 
in  his  granary,  and  refused)  to  recognize  any  rights  of 
plaintiffs  or  to  deliver  their  share.  Held,  that  assumpsit 
would  lie.     Campibell,  J.,  for  the  court,  said: 

"The  question  then  arises,  whether  an  action  properly 
lies  in  assumpsit.  It  is  said  in  several  of  the  cases  that, 
where  property  has  been  tortiously  taken,  and  converted 
by  sale,  the  owner  may  affirm  the  sale  and  sue  for  the  pro- 


22 

ceeds  in  assumpsit,  but  that  where  there  has  been  a  con- 
version without  sale,  the  tort  cannot  be  waived.  It  cer- 
tainly is  somewhat  anomalous  to  place  parties  in'  contract 
relations  against  their  will,  where  no  privity  exists;  and 
the  cases  where  it  is  permitted  seem  to  be  justified  only 
on  the  ground  that  no  ^prejudice  can  result  to  the  defend- 
ant by  allowing  it.  But  where  a  party  commits  a  breach 
of  a  duty,  which  the  Ioajo  implies  from  his  express  con- 
tract j  assumpsit  is  as  appropriate  a  remedy  as  any  other, 
if  a  plaintiff  sees  fit  to  resort  to  it.  The  plaintiffs  here 
derived  their  rights,  as  tenants,  from  the  contract  of  de- 
fendant with  the  grantor,  creating  the  tenancy.  The 
grain  being  in  marketable  condition,  the  co-tenant  in  pos- 
session was  bound,  on  reasonable  request,  to  have  the 
plaintiffs'  share  measured  out  to  them.  His  own  contract 
precludes  him  from  claiming  more  than  his  proportional 
amount.  When  he  concludes  to  retain  the  remainder  he 
certainly  is  bound  to  pay  for  it;  and  the  plaintiffs  may, 
by  their  consent,  convert  the  transaction  into  a  sale;  as  it 
would  have  been  a  sale  originally  had  such  consent  been 
given  at  the  time.  We  think  no  principle  of  law  is  vio- 
lated by  allowing  the  action  to  be  maintained  in  its 
present  form. 

In  Watson  vs.  Stever,  25  Mich.,  286,  the  court,  per 
Cooley,  J.,  said: 

"If  one  has  taken  possession  of  property,  and  sold  or 
disposed  of  it,  and  received  money  or  money's  worth 
therefor,  the  owner  is  not  compellable  to  treat  him  as  a 
wrongdoer,  but  may  aflftrm  the  sale,  as  made  on  his  be- 
half, and  demand  in  this  form  of  action  the  benefit  of  the 
transaction.  But  we  cannot  safely  say  that  the  law  will 
go  very  much  further  than  this  in  implying  a  promise, 
where  the  circumstances  repel  all  implication  of  a  promise 
in  fact.  Damages  for  a  trespass  are  not  in  general  re- 
coverable in  assumpsit;  and  in  the  case  of  the  taking  of 


23 

personal  property,  it  is  generally  held  essential  that  a  sale 
by  the  defendant  should  be  shown"  {Jones  vs.  Howr,  5 
Pick.  Glass  Co.  vs.  Wolcott,  2  Allerij  227;  Stearns  vs. 
Dillingham,  22  Vt.,  6'27;  Mann  vs.  Locke,  11  N.  H.,  248; 
Smith  vs.  Smith,  43  1^.  E.  536;  Willet  vs.  Willet,  3 
Watts,  277;  Pearsoll  vs.  Chapin,  4:4:  Penn.  St.,  9;  Guth- 
rie vs.  Wickliffe,  1  A.  K.  Marsh,  83 ;  Fuller  vs.  Duren,  36 
Ala.,  73;  Sanders  vs.  Hamilton,  3  Da/na,  552;  Barlow  vs. 
Stalw'orth,  27  G^eo.,  517;  Pike  vs.  Bright,  29  A?a.,  332; 
Tucker  vs.  Jewett,  32  Conn.,  563 ;  Emerson  vs.  McNamara, 
41  Me._,  565;  Morrison  vs.  Rogers,  2  Scam.,  317;  O'Reer  vs. 
Strong,  13  /??.,  688;  ^7/io*t  vs.  Jackson,  3  Wis.,  649). 

"The  case  of  Fiquet  vs.  Allison',  12  Mich.,  330,  on  \v|iich 
reliance  was  placed  by  defendant  in  error,  is  clearly  dis- 
tinguishable from  this.  There  the  parties  stood  in  con- 
tract relations  as  tenants  in  common  in  respect  to  the 
property  in  question;  and  when  the  defendant  appropri- 
ated his  co-tenant's  share,  and  refused  to  recognize  his 
right  therein,  he  was,  as  the  court  pointed  out,  guilty  of 
breach  of  a  duty  which  the  law  implied  from  his  express 
contract.  This  case  presents  no  corresponding  feature, 
and  to  sustain  an  action  as  upon  an  implied  contract 
here,  would  be  to  disregard  the  primary  distinctions  in 
the  forms  of  actions." 

In  Tuttle  vs.  Campbell,  74  Mich.,  652,  the  court,  by 
Champlin,  J.,  said: 

"The  general  rule  is  that  before  a  party  can  waive  a 
tort  for  the  conversion  of  personal  property  and  bring 
assumpsit  the  property  in  the  hands  of  the  tort-feasor 
must  have  been  sold  and  converted  into  money,  upon  the 
theory  tJiat  the  money  has  been  received  for  the  plaintiff's 
use.  There  is,  however,  another  class  of  cases,  where  the 
property  has  been  converted'  but  not  sold,  where  the  tort 
may  be  waived  and  assumpsit  brought  for  the  value  of  the 


24 

goods  converted.  This  class  belongs  to  those  relations 
where  a  contract  may  exist  and  at  the  same  time  a  dutv 
is  superimposed  or  arises  out  of  the  circumstances  sur- 
rounding or  attending  the  transaction,  the  violation  of 
which  duty  would  constitute  a  tort.  In  such  cases  the 
tort  may  be  waived  and  assumpsit  be  maintained,  for  the 
reason  that  the  relation  of  the  parties,  out  of  which  the 
duty  violated  grew,  hdd  its  inception  in  contract.  These 
relations  are  usually  those  of  trust  and  confidence,  such 
as  those  of  agent  and  principal,  attorney  and  client,  or 
bailee  and  bailor.  When  an  owner  in  common  of  jDer- 
sonalty  has  the  exclusive  possession  of  the  property  he  is 
a  bailee  of  his  co-owner^s  share.  In  such  case  there  is  a 
contract  of  bailment  implied  between  the  parties,  the  law 
imp'lying  a  delivery  from  the  nature  of  the  case  and  the 
peculiar  rights  which  one  o\sTier  in  common  has  to  such 
property  when  reduced  to  his  possession.  He  takes  it  and 
holds  it  upon  the  trust  and  confidence  that  he  will  care 
for  it  and  use  it,  if  he  uses  it,  in  an  ordinarily  careful 
manner,  and  will  not  sell  or  convert  his  co-owner's  share 
to  his  own  use.  If  he  violates  this  trust  and  confidence 
by  converting  the  property  to  his  own  use,  his  co-owner 
may  bring  trover  for  the  conversion,  or,  waiving  the  tort, 
may  sue  in  assumpsit  to  recover  its  value.  This  has  been 
the  settled  law  in  this  state  for  many  years,  and  was  ex- 
plicitly declared  in  Fiquet  vs.  Allison,  12  Mich.,  328,  which 
case  is  decisive  of  this." 

In  Williamis  vs.  Rogers,  110  Mich.,  418,  Montgomery,  J., 
for  the  court,  said : 

"But  the  right  to  maintain  assumpsit  in  any  case  of 
a  conversion  by  a  co-tenant  rests  upon  the  fact  that  the 
parties  maintain  contractural  relations,  and  that  it  is  a 
violation  of  duty  arising  out  of  contract  for  the  co-tenant 
to  convert  property,  which  fact  distinguishes  the  con- 
version from  the  case  of  a  conversion  by  a  trespasser,  in 


ZO 


which,  before  assumpsit  can  be  brought  by  waiving  the 
tort,  it  must  be  shown  that  the  property  has  been  con- 
verted into  money  or  money's  worth." 

In  Plefka  vs.  Detroit  United  Ry.,  147  Mich.,  641,  Mont- 
gomery, J.,  for  the  court,  said : 

"There  was  no  contract  between  the  plaintiff  and  de- 
fendant. Can  the  plaintiff,  being  entitled  to  maintain  an 
action  on  the  case  to  recover  these  damages,  waive  the 
tort  and  sue  in  assumpsit?  At  the  common  law  a  x>arty 
suffering  injury  through  the  tortious  wrong  of  another 
could  waive  the  tort  and  sue  in  assumpsit  only  in  case  the 
tort  arose  out  of  contract  relations  between  the  parties 
or  the  tort  consisted  of  a  conversion  of  plaintiff's  prop- 
erty into  money  or  money's  worth"  {Watson  vs.  Stever, 
25  Mich.,  386;  Tuttle  vs.  Camphell,  74  Mich.,  652;  Wil- 
liams vs.  Rogers,  110  Mich.,  418). 


OONTRAiOTS   IMPLIED   BY   LAW   WHERE   THERE 
ARE  NO  ACTUAL  CONTRACTS. 

Quasi-contracts  or  contracts  implied  by  law  are  those 
where  the  plaintiff  can  waive  the  tort  and  sue  in  as- 
sumpsit, although  there  is  no  possible  ground  for  reach- 
ing the  conclusion  that  the  defendant  entered  into  an 
actual  contract,  his  tortious  act  showing  a  clear  intent 
to  the  contrary.  The  law  imposes  the  obligation  be- 
cause it  enforces  honesty,  morality  and  justice ;  it  assumes 
that  every  person  agrees  to  observe  the  rules  essential  to 
the  existence  of  civilized  society,  and  to  the  enjoyment 
by  all  of  the  protection  of  organized'  government,  and 
that  a  member  of  society  and  a  party  to  the  social  com- 
pact cannot  avoid  his  obligations  by  a  breach  of  them 
no  matter  how  tortious.     Waiving  the  tort  and  suing  in 


26 

assumpsit   may  be  a  fiction,   but   if  so,   it  is  a  fiction 
founded  in  common  sense  and  reason. 

In  Lamine  vs.  Dorrell,  2  Ld.  Raymond,  1216,  decided 
in  1705,  the  defendant  pretending  to  a  right  to  be  admin- 
istrator, got  administration  granted  to  him,  and  by  that 
means  got  certain  debentures  into  his  hands  and  sold 
them;  then  his  administration  was  repealed,  and  admin- 
istration granted  to  the  plaintiff,  who  sued  the  defendant 
in  indebitatus  assumpsit  for  money  received  by  the  de- 
fendant to  the  use  of  the  plaintiff  as  administrator.  It 
was  objected  that  assumpsit  would  not  lie  because  the 
defendant  sold  the  debentures  as  one  that  claimed  a  title 
and  interest  in  them,  and  therefore  could  not  be  said 
to  receive  the  money  for  the  use  of  the  plaintiff,  which 
indeed  he  received  to  his  otvti  use. 

Held,  that  assumpsit  would  lie. 

"Powell,  Justice.  It  is  clear  the  plaintiff  might  have 
maintained  detinue  or  trover  for  the  debentures;  but 
when  the  act  that  is  done  is  in  its  nature  tortious,  it  is 
hard  to  turn  that  into  a  contract,  and  against  the  reason 
of  assumpsits.  But  the  plaintiff  may  dispense  with  the 
wrong,  and  suppose  the  sale  made  by  his  consent,  and 
bring  an  action  for  the  money  they  were  sold  for,  as 
money  received  to  his  use.  It  has  been  carried  thus  far 
already.  Hoioard  and  Wood's  case,  2  Lev.,  245;  Sir  T. 
Jones,  126,  is  as  far;  there  the  title  of  the  office  was 
tried  in  an  action  for  the  profits. 

"Holt,  chief  justice:  These  actions  have  crept  in  by 
degrees.  I  remember,  i^  the  case  of  Mr.  Aston,  in  a  dis- 
pute about  the  title  to  the  office  of  clerk  of  the  papers  in 
this  court,  there  were  great  counsel  consulted  with ;  and 
Sir  William  Jones  and  Mr.  Saunders  were  of  opinion, 
an  indebitatus  assumpsit  would  not  lie,  upon  meeting 
and    conferring   together,    and   great   consideration.      If 


27 

two  men  reckon  together,  and  one  overpays  the  other, 
the  proper  remedy  in  that  case  is  a  special  action  for  the 
money  overpaid,  or  an  account;  and  yet  in  that  case  you 
constantly  bring  an  indebitatus  assumpsit  for  money 
had  and  received  to  the  plaintiff's  use.  Suppose  a  per- 
son pretends  to  be  guardian  in  socage,  and  enters  into 
the  land  of  the  infant,  and  takes  profits,  though  he  is  not 
rightful  guardian,  yet  an  action  of  account  will  lie 
against  him.  So  the  defendant  in  this  case  pretending 
to  reecive  the  money  the  debentures  were  sold  for  in  the 
right  of  the  intestate,  why  should  he  not  be  answerable 
for  it  to  the  intestate's  administrator?" 

"And  Holt  said,  that  he  could  not  see  how  it  differed 
from  an  indebitatus  assumpsit  for  the  profits  of  an  office 
by  a  rightful  officer  against  a  wrongful,  as  money  had 
and  received  by  the  wrongful  officer  to  the  use  of  the 
rightful." 

Welch  vs.  Begg,  12  Midi.  41,  is  a  case  where  the  plain- 
tiff sued  the  defendant  in  assumpsit  for  pasturing  cattle 
on  his  land. 

Manning,  J.,  witih  the  concurrence  of  Martin,  C.  J., 
said  that  if  defendant  pastured  cattle  on  the  plaintiff's 
land  "without  plaintiff's  consent  he  was  a  trespasser, 
and  the  plaintiff  might  sue  him  in  trespass,  or  waive  the 
trespass  and  sue  him  in  assumpsit,  ^s  he  has  done,  for 
pasturing  his  cattle." 

In  Bowen  vs.  School  District^  36  Mich.  149,  the  defend- 
ant wrongfully  procured  a  district  order.    The  court  said : 

"It  is  objected  that  an  action  of  tort  should  have  been 
brought  and  not  assumpsit.  But  as  the  defendant  made 
use  of  the  order  as  money,  the  law  will  raise  an  implied 
promise  to  pay  the  amount.  The  district  perhaps  might 
have  sued  in  tort,  but  was  not  compelable  to  do  so." 


28 

Followed  in  a  case  where  a  supervisor  converted  town- 
ship orders  to  his  own  use.  {Buckeye  vs.  Cook,  90  Mich. 
432.) 

The  foregoing  review  of  the  law  of  implied  contracts 
as  actually  enforced  by  the  courts,  makes  it  perfectly 
plain,  that  on  any  view  that  can  be  taken  of  the  case 
the  Detroit  United  Railway  has  a  legal  right  to  continue 
the  service  it  renders  the  public,  beyond  the  period  of 
thirty  years,  expiring  November  14,  1909. 

1.  On  the  general  principle  of  the  law  of  implied  con- 
tracts, that  it  will  be  presumed  that  a  party  to  an  ex- 
press contract,  impliedly  agrees  to  do  that  which  under 
all  the  facts  and  circumstances,  he  ought  to  do,  and 
which  he  would  have  expressly  agreed  to  do,  if  his  at- 
tention had  been  called  to  it. 

2.  On  the  principle  of  the  law  of  implied  contracts, 
that  if  contractual  relations  exist  between  the  parties, 
and  these  relations  are  coupled  with  a  duty  imposed 
by  law,  then  a  contract  to  perform  that  duty  will  be  im- 
plied. 

3.  On  the  principle  of  the  law  of  quasi  contracts,  that 
where  reason,  justice,  and  the  protection  of  society  de- 
mands it,  the  law  will  imply  an  obligation,  even  in  the 
absence  of  any  actual  implied  contract,  and  directly  con- 
trary to  the  intention  of  the  party  as  indicated  by  his 
words  or  conduct. 

On  the  facts  and  surrounding  circumstances  as  they 
existed  at  the  time  the  existing  contracts  between  the 
Detroit  United  RaUway  and  the  City  of  Detroit,  were 
entered  into,  there  is  ample  room  to  hold  that  both  par- 
ties understood  and  agreed  that  the  company  should 
continue,  and  the  city  should  permit  the  company  to  con- 


29 

tinue,  the  service  beyond  the  period  of  thirty  years,  on 
the  old  terms  and  conditions  and  rates  of  fare,  or  on 
such  as  the  law  imposes.  There  can  be  no  doubt  about 
this,  when  it  is  remembered  and  considered,  that  the 
contractual  relations  existing  between  the  parties,  are 
coupled  with  a  duty  imposed  by  the  law  on  both  of  them, 
to  serve  the  general  public. 

Going  a  step  further,  it  may  be  truthfully  asserted 
that  the  demands  and  requirements  of  the  public  service, 
are  such  that  although  it  is  held,  that  the  Detroit  United 
Railway  is  under  an  implied  contract  to  stop  the  oper- 
ation of  the  cars  and  surrender  the  streets  on  November 
14,  1909,  yet,  the  rights  of  the  general  public,  consisting 
of  all  the  people  of  the  State  of  Michigan,  and  their  visi- 
tors from  other  states  and  countries,  are  of  such  para- 
mount importance,  that  the  local  contract  must  give 
way,  and  yield  to  the  superior  right. 

If  it  had  been  expressly  stipulated  that  at  the  end 
of  the  thirty  years,  the  street  railway  company  must  ac- 
cept such  rates  of  fare  as  the  city  might  dictate,  wli ether 
reasonable  or  unreasonable,  or  remove  from  the  streets, 
the  fact  that  the  contract  was  accepted  by  the  company, 
would  not  prevent  the  courts  from  rejecting  the  stipula- 
tion as  unreasonable,  and  therefore,  illegal,  void  and 
non-enforceable. 

That  is  just  what  was  done  in  the  natural  gas  com- 
pany case  of  Pittsburg's  Appeal,  115  Pa.  St.  4,  and  in 
the  exclusive  privilege  case  of  Citizens'  Street  Ry.  Co,  vs. 
Detroit  Ry.,  171  TJ.  S.  48. 

But  I  am  getting  ahead  of  my  argument.  I  only  men- 
tion these  subjects  here  to  show  that  the  implied  con- 
tract contended   for,   is  a   necessarj'  implication,   as   all 


30 

contracting  parties  are  presumed  to  have  contracted  with 
knowledge  of  the  law,  and  subject  to  its  requirements. 

An  implied  covenant  on  the  part  of  the  City  of  De- 
troit that  it  would  not  prevent  the  Detroit  City  Kailway, 
its  successors  and  assigns,  from  continuing  beyond  the 
period  of  thirty  years  the  service  the  street  railways 
render  the  public,  is  much  more  in  accord  with  the  facts 
of  the  case  and  the  law  applicable  thereto,  than  an  im- 
plied covenant  on  the  part  of  the  company  that  at  the 
end  of  the  thirty  years  it  would  cease  operating  its  rail- 
ways, and  would  remove  the  tracks  and  other  structures 
from  the  streets. 

Any  such  surrender  by  the  company  would  be  a  public 
disaster.  New  street  railways  could  not  be  built  and 
put  in  operation  for  many  months;  and  when  we  give 
due  consideration  to  the  legal  obligation  of  the  company 
to  continue  to  serve  the  public,  and  to  the  legal  obliga- 
tion of  the  city  as  trustee  for  the  general  public,  to  pro- 
tect and  improve  its  streets  so  as  to  make  them  conven- 
ient and  useful,  the  conclusion  is  inevitable  that  the  city 
must  have  contracted  with  a  full  recognition  of  its  ow^n 
and  the  company's  obligation,  and  that  the  company 
has  a  right  to  remain  in  the  street  beyond  the  thirty 
years. 

This  implied  right  might  be  considered  strong  enough 
to  mean  that  all  the  terms  and  conditions  of  the  original 
contracts  would  be  continued  in  force,  but,  it  is  not  neces- 
sary to  go  that  far.  An  argument  which  proves  too 
much  does  not  prove  anything. 

Ix  may  well  be  held  that  the  agreement  fixing  the 
rat-es  of  fare  expires  at  the  end  of  the  thirty  years,  and 
that  thereafter  the  company  will  be  subject  to  its  com- 


31 

mon  law  obligation  to  carry  passengers  for  reasonable 
fares.  Agreements  fixing  rates  of  fare  are  not  intended 
to  authorize  unreasonable  fares,  but  are  a  means  of  de- 
termining as  between  the  company  and  the  public  what 
is  to  be  regarded  as  reasonable.  When  any  such  agree- 
ment expires  by  its  own  limitation,  the  street  railway 
company  is  not  authorized  to  charge  any  fare  it  sees 
fit,  but  as  a  common  carrier  it  becomes  subject  to  the 
rule  which  has  prevailed  for  centuries,  that  a  common 
carrier  is  only  entitled  to  reasonable  compensation  for 
his  services. 

There  is  no  reason  why  we  should  doubt  the  -rule  of 
construction  laid  down  by  Blackstone  and  Chief  Justice 
Marshall  that  the  law  presumes  "that  every  man  hath 
engaged  to  perform  what  his  duty  and  justice  requires," 
and  that  contracting  "parties  are  supposed  to  have  made 
stipulations  they  ought  to  have  made." 

The  cases  I  have  cited  on  the  subject  of  implied  con- 
tracts show  that  the  courts  are  constantly  restorting  to 
implied  contracts  and  reaching  the  conclusion  that  they 
exist  whenever  required  by  fair  dealing,  justice  and 
equity.  Without  such  implications  it  would  be  almost 
impossible  to  conduct  the  ordinary  affairs  of  life  or  to 
carry  on  business.  No  lawyer  or  other  scrivener  could 
put  every  desire  or  thought  of  the  contracting  parties  in 
express  words  or  anticipate  every  possible  contingency 
that  might  arise  in  the  execution  of  their  contract;  and 
the  whole  mass  of  implied  contracts  arising  from  con- 
tract relations  and  duties  imposed  by  law,  as  well  as 
those  imposed  by  the  law  where  there  are  no  actual  con- 
tracts would'  have  to  be  eliminated  from  the  books  of 
the  law. 


32 

Public  service  corporations  would  be  released  from  all 
duties  and  obligations  except  those  expressly  imposed 
by  statutes,  and  the  whole  body  of  statutory  law  relating 
to  corporations  would  have  to  be  revised,  reformed  and 
very  greatly  enlarged.  Our  whole  system  of  jurispru- 
dence, which  is  the  principal  reliance  and  protection  of 
organized  society,  would  be  disturbed  and  rendered  use- 
less. 


33 


II. 

The  Detroit  United  Railway  is  under  an  obligation 
to  the  State  of  Michigan,  from  which  it  received  its 
corporate  franchises,  to  operate  its  street  railways  for 
the  public  use,  during  the  entire  period  for  which  the 
company  was  incorporated,  and  at  or  before  its  ex- 
piration, to  reorganize  itself  or  to  turn  the  property 
over  to  another  company,  to  continue  the  service  it 
renders  the  public. 

It  is  impossible  to  escape  the  conviction  that  street 
railways  and  other  public  utilities,  are  at  their  incep- 
tion, intended  to  be  permanent  public  improvements,  and 
not  mere  temporary  affairs.  In  1862  and  1863  and  again 
in  1879,  everybody  in  the  city  of  Detroit  believed  and 
knew  that  in  thirty  years,  the  population  of  the  city 
would  be  very  greatly  increased,  and  that  the  importance 
ci  the  street  railways,  as  a  public  convenience  would 
steadily  increase  year  by  year.  If  an  express  stipula- 
tion, that  at  the  end  of  the  term,  the  tracks  should  be 
taken  out  of  the  streets,  and  the  service  stopped,  even 
for  the  length  of  time  it  would  take  to  build  new  streel 
railways,  it  would  have  been  laughed  at  as  absurd,  and 
some  provision  would  have  been  found  to  prevent  any 
such  thing. 

Every  public  corporation,  accepting  the  franchises 
granted  to  it  by  the  state  either  under  a  special  charter 
or  a  general  law,  impliedly  agrees  to  perform  the  ser- 
vice for  w^hich  it  is  incorporated.  If  it  does  not  do  so, 
the  public  has  two  remedies,  which  depend  somewhat  on 
the  circumstances  surrounding  each  case.  The  state  can 
enforce  a  forfeiture  of  the  franchises  by  quo  warranto. 


34 

or  it  can  compel  the  company  bj  mandamus  to  perform 
its  contract. 

This  is  well  illustrated  by  a  case  in  New  York.  {Peo- 
ple vs.  Albany  &  Vermont  Railroad,  24  N.  Y.  261).  The 
railroad  company  was  engaged  in  taking  up  and  remov- 
ing its  railroad  on  twenty-one  miles  of  its  route,  when 
the  attorney  general  commenced'  a  suit  for  an  injunction 
and  specific  performance  of  the  alleged  contract  of  the 
company  to  maintain  and  operate  its  railroad  for  its 
entire  length. 

Wright,  J.,  examining  the  terms  of  the  charter  of  the 
company  came  to  the  conclusion  that  the  charter  did  not 
impose  any  obligation  on  the  part  of  the  company  to 
exercise  its  franchises  when  against  its  own  interests. 
One  of  the  six  judges  siting  in  the  case  agreed  with  him. 
All  of  them  agreed  that  it  was  not  a  case  for  the  equity 
jurisdiction  of  the  courts.  Four  of  them,  "however,  were 
of  the  opinion  that  a  corporation  is  under  a  legal  obliga- 
tion to  exercise  its  franchises,  and  that  it  has  not  the 
option  to  discontinue  a  part  of  its  road  and  forfeit  its 
franchises.  They  agreed  that  the  remedy  is  not  by  ac- 
tion in  equity  for  a  specific  performance  but  by  man- 
damus or  indictment,  or  at  the  election  of  the  people 
by  proceeding  to  annul  the  existence  of  the  corporation." 

In  another  case  in  New  York,  a  mandamus  was  or- 
dered to  be  issued  to  compel  the  New  York  Central  Rail- 
road Company,  to  forthwith  resume  the  discharge  of  their 
duties  as  common  carriers  and  the  exercise  of  their  fran- 
chise by  promptly  receiving,  transporting  and  delivering 
all  such  freight  or  other  property  as  might  be  offered  to 
them  for  transportation  at  their  stations  in  and  to  the 
city  of  New  York  upon  the  usual  and  reasonable  terms 
and  charges.     (People  vs.  N.  Y.  C-,  28  Hun.  543). 


35 

The  court  cited  a  large  number  of  cases  in  which  writs 
of  mandamus  had  been  issued  against  railroad  companies, 
and  then  said: 

"These  are  all  express  or  implied  obligations  arising 
from  the  charters  of  the  railroad  companies,  but  not 
more  so  than  the  duty  to  carry  freight  and  passengers. 
That  duty  is,  indeed,  the  ultima  ratio  of  their  existence; 
the  great  and  sole  public  good  for  the  attainment  and 
accomplishment  of  which  all  the  other  powers  and  duties 
are  given  or  imposed.  It  is  strangely  illogical  to  assert 
that  the  state,  through  the  courts,  may  compel  the  per- 
formance of  every  step  necessary  to  bring  a  corporation 
into  a  condition  of  readiness  to  do  the  very  thing  for 
which  it  is  created,  but  is  then  powerless  to  compel  the 
doing  of  the  thing  itself. 

"We  cannot  bring  our  minds  to  entertain  a  doubt  that 
a  railroad  corporation  is  compellable  by  mandamus  to 
exercise  its  duties  as  a  carrier  of  freight  and  passen- 
gers; and  that  the  power  so  to  compel  it  rests  equally 
firmly  on  the  ground'  that  that  duty  is  a  public  trust, 
which  having  been  conferred  by  the  state  and  accepted 
by  the  corporation  may  be  enforced  for  the  public  bene- 
fit; and  also  upon  the  contract  between  the  corporation 
and  the  State,  expressed  in  its  charter  or  implied  by  the 
acceptance  of  the  franchise  (Abbott  vs.  Johnstone  R.  R. 
Co.,  80  N.  Y.  31) ;  also  upon  the  ground  that  the  com- 
mon right  of  all  the  people  to  travel  and  carry  upon 
every  public  highway  of  the  state  has  been  changed  in 
the  special  instance,  by  the  legislature  for  adequate  rea- 
sons into  a  corporate  franchise,  to  be  exercised  solely  by 
a  corporate  body  for  the  public  benefit,  to  the  exclusion 
of  all  other  persons,  whereby  it  has  become  the  duty 
of  the  state  to  see  to  it  that  the  franchise  so  put  in  trust 
be  faithfully  administered  by  the  trustee." 


36 

In  the  case  cited,  the  court,  80  N.  Y.  31,  said: 

"The  legislature  conferred  upon  the  defendant  corpor- 
ation a  corporate  existence  to  carry  on  the  business  of 
common  carriers,  and  its  obligation  to  properly  discharge 
the  duties  of  that  position  is  as  binding  and  operative 
as  if  specified  in  the  dct." 

Bridgeton  vs.  Traction  Co.,  62  iNT.  J.  L.  592,  is  a  case 
Avhere  it  appeared  that  the  tracks  of  the  traction  com- 
pany passed  over  a  bridge  which  was  not  in  the  control 
of  the  municipality  but  in  that  of  the  board  of  chosen 
freeholders  of  the  county.  The  traction  company  en- 
gaged in  a  controversy  with  the  board  of  chosen  free- 
holders over  the  use  of  the  bridge,  and  ceased  to  operate 
its  cars  on  the  west  side  of  the  stream.  The  city  ap- 
plied for  a  mandamus  and  the  writ  was  granted. 

The  court,  at  page  600,  said: 

"It  became  the  duty  of  the  respondent  company  to 
operate  the  railway  over  its  entire  route  under  the  fran- 
chises as  acquired  by  it.  Its  exercise  of  franchise  in  the 
operation  of  its  railw^ay  upon  this  street  was  exclusive, 
and  it  was  its  duty  to  construct,  maintain  and  operate 
a  railway  on  the  surface  of  the  street  to  carry  passengers 
and  demand  tolls,  and  that  was  in  so  far  exclusive  that 
others  could  not  use  the  road  without  the  grant  of  the 
legislature,  nor  exercise  that  same  or  similar  franchise 
upon  that  street  without  such  grant.  Citizens'  Coach  Co. 
vs.  Camden  Horse  Railroad  Co.,  6  Stew.  Eq.  267,  279. 

"In  Messenger  et  al  vs.  Pennsylvania  Railroad  Co.,  7 
Vroom.,  407,  Chief  Justice  Beasley,  speaking  of  the  duties 
of  a  common  carrier  in  a  case  involving  a  contract  creat- 
ing illegal  preferences,  on  page  410,  says: 

"  'A  person  having  a  public  duty  to  discharge,  is  un- 


37 

doubtedly  bound  to  exercise  such  office  for  the  equal 
benefit  of  all.'  Again,  'A  company  of  this  kind  is  in- 
vested with  important  prerogative  franchises,  among 
which  are  the  rights  to  build  and  use  the  railway,  and  to 
charge  and  take  tolls  and  fares.  These  prerogatives  are 
grants  from  the  government,  and  public  utility  is  the 
consideration  for  them.'  Again,  he  says,  ^It  cannot  be 
supposed  that  it  was  the  legislative  intention,  when  such 
privileges  were  given,  that  they  were  to  be  used  as  pri- 
vate property  at  the  discretion  of  the  recipient,  but,  to 
the  contrary  of  this,  I  think  an  implied  condition  at- 
taches to  such  grants,  that  they  are  to  be  held  as  a  quasi 
public  trust  for  the  benefit  at  least  to  a  considerable 
degree,  of  the  entire  community.  In  their  very  nature 
and  constitution,  as  I  view  this  question,  these  com- 
panies become,  in  certain  aspects,  quasi  public  agents.' 
"The  grant  being  exclusive  they  must  be  held  to  a 
good  faith  in  the  performance  and  fulfillment  of  their 
duties.  I  cannot  perceive  any  excuse  whatever  by  which 
the  respondent  company  can  be  permitted  to  abandon 
the  operation  of  any  part  of  it.  That  a  portion  is  un- 
profitable or  that  a  portion  is  more  difficult  to  operate, 
are  not  valid  reasons  for  abandonment.  Its  application 
to  the  city  wa«  for  the  location  of  its  tracks  over  the 
whole  route.  The  terms  and  conditions  of  the  ordinance, 
and  the  ordinance  passed  on  the  faith  of  the  duty  of 
the  company,  were  to  operate  its  road  over  the  entire 
route  located.  In  view  of  this  ordinance  it  must  be 
conclusively  said  that  if  one  part  was  to  be  operated 
and  that  another  part  might  be  abandoned  at  the  dis- 
cretion of  the  company,  the  terms  and  conditions  of  the 
ordinance  would  have  been  different.  This  must  be  con- 
clusively assumed  in  a  case  of  this  character.  It  ap- 
pears clear  from  the  statute  and  the  ordinance  that  it 
is  the  duty  of  such  company  organized  under  the  statutes 


38 

to  operate  the  roads  mentioned  in  its  certificate  of  in- 
corporation for  the  benefit  of  the  public,  in  consideration 
that  it  shall  have  the  franchise  of  transporting  the  pas- 
sengers and  taking  the  tolls  from  them,  and  that  it  can- 
not escape  the  performance  of  this  duty  as  a  public 
agent." 

Speaking  of  the  contract  existing  between  the  state 
and  a  railroad  corporation  created  by  it,  Mr.  Justice 
Brewer  for  the  court,  in  Reagan  vs.  Farmers'  Loom  d- 
Trust  Co.,  154  U.  S.  362,  393,  said: 

"Obviously,  one  obligation  assumed  by  the  corporation 
was  to  construct  and  operate  a  railroad  between  the 
termini  named;  and  on  the  other  hand  one  obligation  as- 
sumed by  the  state  was  that  it  would  itot  prevent  the 
company  from  so  constructing  and  operating  the  road.'' 

The  same  learned  justice  delivering  the  opinion  of  the 
court  in  Missouri  Pacific  Railumy  Co.  vs.  Larahee  Flour 
Mills  Co.,  211  U.  S.  612,  held  that  even  in  the  absence 
of  legislative  enactment,  the  order  of  a  commission  or 
other  administrative  board,  or  special  contract,  a  rail- 
road company  as  a  common  carrier,  can  be  compelled 
by  mandamus  to  perform  its  common  law  duty  to  treat 
all  shippers  alike.    He  said: 

"Coming  directly  to  that,  counsel  for  plaintiff  in  error 
contend  that  no  duty  was  imposed  on  the  railroad  com- 
pany by  act  of  the  legislature  or  mandate  of  commission 
or  other  administrative  board.  Conceding  this,  it  is  also 
true  that  the  Missouri  Pacific  was  a  common  carrier, 
and  as  such  was  engaged  in  the  work  of  transferring 
cars  from  the  Santa  Fe  track  to  the  mill  company,  and 
after  this  controversy  arose  continued  like  transfer  for 
all  industries  located  on  the  Missouri  Pacific  at  Stafford, 


89 

except  the  mill  company.  While  no  one  can  be  com- 
pelled to  engage  in  the  business  of  a  common  carrier, 
yet  when  he  does  so,  certain  duties  are  imposed  which 
can  be  enforced  by  mandamus  or  other  suitable  remedy. 
The  Missouri  Pacific  engaged  in  the  business  of  transfer- 
ring cars  from  the  Santa  Fe  track  to  industries  located 
at  Stafford,  and  continued  to  do  so  for  all  parties  except 
the  mill  company.  So  long  as  it  engaged  in  such  trans- 
fer it  was  bound  to  treat  all  industries  at  Stafford  alike, 
and  could  not  refuse  to  do  for  one  that  which  it  was 
doing  for  others.  No  legislative  enactment,  no  special 
mandate  from  any  commission,  or  other  administrative 
board  was  necessary,  for  the  duty  arose  from  the  fact 
that  it  was  a  common  carrier.  This  lies  at  the  founda- 
tion of  the  law  of  common  carriers.  Whenever  one  en- 
gages in  that  business  the  obligation  of  equal  service 
to  all  arises,  and  that  obligation,  irrespective  of  legisla- 
tive action  or  special  mandate,  can  be  enforced  by  the 
courts." 

In  Thomas  vs.  West  Jersey  R.  R.  Co.,  101  V.  S.  71, 
the  court  in  an  opinion  by  Justice  Miller,  said : 

"That  principle  is,  that  where  a  corporation,  like  a 
railroad  company,  has  granted  to  it  by  charter  a  fran- 
chise intended  in  large  measure  to  be  exercised  for  the 
public  good,  the  due  performance  of  those  functions  be- 
ing the  consideration  of  the  public  grant,  any  contract 
which  disables  the  corporation  from  performing  those 
functions  which  undertakes,  without  the  consent  of  the 
state,  to  transfer  to  others  the  rights  and  powers  con- 
ferred by  the  charter,  and  to  relieve  the  grantees  of  the 
burden  which  it  imposes,  is  a  violation  of  the  contract 
with  the  state,  and  is  void  as  against  public  policy.  This 
doctrine   is   asserted   with  remarkable   clearness   in   the 


40 

opinion  of  this  court,  delivered  by  Mr.  Justice  Campbell, 
in  the  case  of  7?.  R.  Co.  vs.  Winans,  17  Hmv.  30." 

In  the  case  cited  the  court  said : 

''Important  franchises  were  conferred  upon  the  cor- 
poration to  enable  it  to  provide  the  facilities  to  communi- 
cation and  intercourse,  required  for  the  public  conven- 
ience. Corporate  management  and  control  over  these 
were  prescribed,  and  corporate  responsibility  for  their 
insufficiency  provided,  as  a  remuneration  to  the  commun- 
ity for  their  grant.  The  corporation  cannot  absolve  itself 
from  the  performance  of  its  obligations,  without  the  con- 
sent of  the  legislature.  (Beman  vs.  Ru^ford,  1  Simon ^ 
N.  S.  550;  Winch  vs.  B.  d  L.  Railway  Co.,  13  L.  d  E. 
506." 

The  two  foregoing  cases  were  cited  approvingly  in 
Central  Transportation  Co.  vs.  Pullman  Palace  Car  Co., 
139  V.  8.  24. 

In  Union  Pacific  Ry.  Co.  vs.  Chicago,  Etc.,  Ry.  Co., 
163  V.  8.  564,  581,  the  court  said: 

"The  general  rule  is  that  a  contract  by  which  a  rail- 
road company  renders  itself  incapable  of  performing  its 
duties  to  the  public  or  attempts  to  absolve  itself  from 
those  obligations  without  the  consent  of  the  state,  or  a 
contract  made  by  a  corporation  beyond  the  scope  of  its 
powers,  express  or  implied,  on  a  proper  construction  of 
its  charter,  cannot  be  enforced,  or  rendered  enforceable 
by  the  application  of  the  doctine  of  estoppel.  Thomas 
vs.  Railroad  Co.,  101  U.  S.  71;  Centrdl  Transportation 
Co.  vs.  Pullman  Car  Co.,  139  U.  8.  24." 

State  vs.  Hartford  d  New  Haven  R.  R.  Co.,  29  Conn. 
538,  is  a  case  where  a  railroad  company  discontinued 


41 

the  running  of  passenger  cars  over  a  portion  of  its  road 
terminating  at  tide  water.  The  object  of  the  company 
was  to  divert  passenger  traffic  from  a  steamboat  line  run- 
ning from  the  terminus  to  New  York. 

Held,  that  mandamus  should  issue  to  compel  the  com- 
pany to  restore  the  passenger  service. 

The  court  said: 

"We  forbear  going  into  other  questions  raised  on  the 
trial,  or  commenting  on  tlie  authorities  cited  by  counsel. 
We  think  it  unnecessary,  and  prefer  to  place  our  deci- 
sion upon  the  simple  ground  of  the  corporate  duty  of  tlie 
respondents.  All  jurists  and  judges  will  at  once  agree 
that  chartered  companies  are  obliged  fairly  and  fully  to 
carry  out  the  objects  for  which  they  are  created,  and 
that  they  can  be  compelled  by  mandamus  to  do  it;  and 
it  will  not  be  questioned  that  in  the  case  of  public  high- 
ways, whether  turnpikes  or  railroad's,  they  are  bound  to 
keep  them  fit  for  use,  and,  in  the  case  of  railroads,  to 
keep  them  furnished  with  suitable  cars,  engines  and  at- 
tendants, without  which  they  can  not  be  used  at  all." 

Gates  vs.  Boston  d  New  York  Air  Line  R.  R.  Co.,  53 
(Jonn.  333,  is  a  case  where  a  mortgage  on  a  railroad  was 
foreclosed,  and  the  legislature  authorized  the  bond  hold- 
ers by  a  vote  of  the  majority,  to  reorganize  as  a  new  cor- 
poration with  the  rights  of  the  old  corporation.  A  min- 
ority' stockholder  objected  but  it  was  held,  that  where  a 
company  has  taken  private  property'  and  constructed  its 
road,  it  has  come  under  an  obligation  to  carry  into 
effect  the  objects  of  its  charter  and  its  capital  stock  fran- 
chises and  property  stand  charged  primarily  with  this 
public  trust;  and  that  the  legislature  could  authorize  a 
majority  of  the  bond  holders  to  reorganize  the  corpora- 


42 

tion,  because  that  was  a  proper  means  of  securing  the 
performance  of  the  paramount  public  trust. 

The  court,  at  page  34,  said : 

"The  broad  claim  is  now  made  by  the  plaintiff,  that, 
as  he  was  not  personally  a  party  to  the  re-organization 
scheme,  had  no  actual  notice  of  it,  and  has  not  assented 
that  his  bonds  should  mature  and  the  trustee  be  dis- 
charged, therefore  his  bonds  with  their  coupons  are  out- 
standing subsisting  obligations  of  the  old  corporation, 
charged  upon  this  railroad  property,  and  that  either  by 
an  absolute  sale,  or  by  operation  of  the  railroad  by  the 
trustee,  said  property  and  franchises  must  be  appro- 
priated to  the  discharge  of  the  obligations  held  by  him, 
notwithstanding  that  a  different  mode  of  appropriating 
the  property  in  liquidation  of  the  bonds  has  been  agreed 
upon  by  a  majority  of  his  co-bondholders,  and  has  been 
sanctioned  by  the  state  and  by  a  court  of  equity  having 
jurisdiction  of  the  subject  matter. 

"The  plaintiff's  contention  in  this  behalf  rests  upon 
his  assumption  that  he  has  a  constitutional  property  right 
to  have  the  property  appropriated  in  the  manner  claimed 
by  him. 

"In  making  this  claim  the  plaintiff  ignores,  or  subor- 
dinates to  his  own  claim,  both  the  private  rights  of  his 
co-bondholders  and  public  rights  vested  in  trust  in  the 
state,  while  upon  every  true  theory  and  exposition  of 
his  contract  the  rights  of  the  public  are  superior  to  his 
private  rights,  and  the  rights  and  interests  of  his  co- 
bondholders  are  equally  with  his  own  to  be  protected  by 
the  law.  The  plaintiff's  argument  treats  this  matter  as 
one  of  strict  legal  private  right  of  an  individual  creditor, 
against  or  to  private  property  of  an  individual  debtor, 
instead  of  a  claim  of  exceptional  character  upon  property 
of  peculiar  nature,  in  which  private  rights  of  others  and 


43 

the  right  of  the  public  exist,  which  must  be  regarded 
and  protected. 

"One  public  right  consists  in  the  continuous  uses  of 
the  railroad,  its  franchises  and  corporate  property,  in 
the  manner  and  for  the  purposes  contemplated  bj  the 
terms  of  the  charter.  All  these  corporate  franchises  and 
this  property  are  held  subject  to,  and  charged  with,  this 
obligation. 

"It  is  true  that  the  charter  is  permissive  in  its  terms, 
and  probably  no  obligation  rests  upon  the  corporation 
to  construct  the  railroad;  the  option  to  exercise  the 
right  of  eminent  domain  and  other  public  rights  is  grant- 
ed. And  when  that  option  has  been  made,  and  the  cor- 
poration has  located  and  constructed  its  line  of  tracks, 
exercising  the  power  of  the  state  in  taking  property  of 
others,  and  in  so  locating  and  constructing  its  road,  has 
invited  and  obtained  subscriptions  upon  the  implied 
promise  to  construct  and  operate  its  road,  has  com- 
menced to  operate  the  road  under  the  granted'  powers, 
thereby  inducing  the  public  to  rely,  in  their  personal  and 
business  relations,  upon  that  state  of  affairs;  by  so  ac- 
cepting and  acting  upon  the  chartered  powers  a  contract 
exists  to  carry  into  full  effect  the  objects  of  the  charter, 
and  the  capital  stock,  franchises  and  property  of  the 
corporation  stand  charged  primarily  with  this  trust. 
The  large  sovereign  powers  given  by  the  state  to  railroad 
corporations  are  granted  and  exercised  only  upon  the 
theory  that  these  public  rights  are  to  be  used  to  promote 
the  general  welfare.  Having  exercised  those  powers, 
the  corporation  has  no  right  against  the  will  of  the  state 
to  abandon  the  enterprise,  tear  up  its  track,  and  sell 
its  rolling  stock  and  other  property,  and  divide  the  pro- 
ceeds among  the  stockholders." 

"The  possible  effects  of  the  exercise  of  such  a  claimed 
power   are  utter  disaster  to  the  great   interests  of  the 


4^ 

state,  certain  destruction  of  private  property  in  wliicli 
whole  communities  created  and  existing  upon  the  faitli 
of  the  continuous  use  of  the  chartered  powers  are  inter- 
ested, and,  indeed,  the  life  of  the  citizen  as  well  as  his 
property  rights  are  thus  jeopardized.  Upon  principle  it 
would,  seem  plain  that  railroad  property  once  devoted 
and  essential  to  public  use,  must  remain  pledged  to  that 
use,  so  as  to  carry  to  full  completion  the  purpose  of  its 
creation;  and  that  this  public  right,  existing  by  reason 
of  the  public  exigency,  demanded  by  the  occasion,  and 
created  by  the  exercise  by  a  private  person  of  the  powers 
of  a  state,  is  superior  to  the  property  rights  of  corpor- 
ations, stockholders  and  bondholders." 

In  State  vs.  Spokane  Street  Ry.  Co.,  19  Wash.  518,  th(; 
court  in  a  carefully  considered  opinion,  by  Reavis,  J., 
reviewed  the  authorities,  and  held : 

(1.)  Where  a  street  railway  company  attempts  to  dis- 
continue the  operation  of  a  line,  after  acquiring  the  right 
and  commencing  the  performance  of  the  service,  its  duty 
to  continue  the  operation  of  the  railway  may  be  enforced 
by  mandamus. 

(2.)  A  street  railway  company  which  has  occupied 
public  highways  for  several  years  in  the  operation  of  its 
line  without  a  grant  or  privilege  or  franchise  from  the 
municipality,  cannot  urge  that  objection  for  the  purpose 
of  relief  against  its  enforced  continuance  to  operate  its 
line  thereon,  when  its  use  and  occupation  of  such  high- 
ways has  been  undisturbed. 

(3.)  A  street  railway  company  which  receives  its 
franchises  from  the  state  and  enters  upon  the  enjoyment 
of   them   cannot  cease   to   perform   the  functions  which 


45 

were  the  consideration  for  the  grant  of  such  franchises 
without  the  consent  of  the  granting  power. 

In  New  York  an  electric  surface  street  railway  is  re- 
garded as  an  additional  burden  on  the  street,  and  be- 
before  a  street  railway  company  can  occupy  a  street,  it 
must  have  the  consent  of  the  abutting  owners,  as  well 
as  that  of  the  municipality.  The  franchises  of  the  com- 
pany are  derived  from  the  state. 

Paige  vs.  Schenectady  Ry.  Co.,  178  'N.  Y.  102,  is  a 
case  where  a  receiver  of  a  street  railway  company  in  a 
mortgage  foreclosure  suit,  took  up  and  abandoned  the 
street  railway  on  Washington  avenue  in  Schenectady. 
He  did  this  with  the  consent  of  the  common  council  of 
the  city,  and  a  portion  of  the  abutting  owners  w^ho  had 
consented  to  the  original  construction  of  the  road,  but 
without  the  consent  of  the  company  or  its  stockholders, 
and  without  the  consent  of  the  state. 

The  purchaser  at  the  foreclosure  sale  sought  to  re- 
build the  road. 

Held: 

(1)  That  the  reeciver  had  no  authority  to  abandon 
the  road,  "without  the  consent  of  the  company,  of  the 
stockh( 
state." 


stockholders  and  the  consent  of  the  legislature  of  the 


(2)  "Nor  was  the  commoii  council  clothed  with  any 
authority  to  compel  or  to  authorize  an  abandonment  of 
any  portion  of  such  street  railway.  While  its  consent 
might  possibly  waive  any  right  the  city  possessed  to  en- 
force or  compel  the  .enforcement  of  a  continued  operation 
of  the  road,  still  it  could  not  by  an/y  action  on  its  part 
deprive  the  railway  company  of  its  rights,  affect  the 
rights  of  the  stockholders,  or  the  rights  of  the  state  and 


46 

general  public  to  require  the  company  to  continue  the 
maintenance  and  operation  of  its  railroad  as  originally 
constructed." 

(3)  "The  right  to  construct  and  operate  a  street  rail- 
way is  a  franchise  which  must  have  its  source  in  the 
sovereign  power,  and  the  legislative  power  over  the  sub- 
ject has  this  limitation,  that  the  franchise  must  be  grant- 
ed for  public  and  npt  for  private  purposes,  or  at  least 
the  grant  must  be  based  upon  public  considerations.  It 
is  well  settled  on  the  soundest  principles  of  public  policy 
that  a  contract,  by  which  a  railroad  company  seeks  to 
render  itself  incapable  of  performing  its  duties  to  the 
public,  or  attempts  to  absolve  itself  from  its  obligations 
without  the  consent  of  the  state,  is  void  and  cannot  be 
rendered  enforceable  by  the  doctrine  of  estoppel,  and  any 
contract  which  disables  the  corporation  from  performing 
its  functions  without  the  consent  of  the  state,  and  to  re- 
lieve the  grantees  of  the  burden  it  imposes,  is  in  viola- 
tion of  the  contract  with  the  state,  and  is  void  as  against 
public  policy.  {Fanning  vs.  Osborne,  102  ISI.  Y.  441; 
Union  Pacific  R.  Co.  vs.  Chicago,  R.  I  &  P.  Ry.  Co.,  163 
U.  S.  564,  581 ;  State  vs.  Hartford  &  N.  Haven  R.  R.  Co., 
29  Conn.  538;  State  vs.  S.  C.  <&  P.  E.  R.  Co.,  7  :t^eb.  357; 
City  of  Potwin  Place  vs.  Topeka  Ry.  Co.,  33  Pacific  Rep. 
309;  State  ex  rel.  Frinsfelder  vs.  Spokane  St.  R.  Co., 
53  Pacific  Rep.  710;  King  vs.  Severn  d  Wye  R.  Co.,  2  B. 
&  Aid.  646.) 

(4)  "Within  the  principle  of  the  cases  cited  it  is 
obvious  that  the  public  had  an  interest  in  that  portion 
of  the  Schenectady  street  railway  which  was  constructed 
in  Washington  avenue,  which  could  not  be  destroyed  or 
abandoned  without  the  consent  of  the  state,  and  that  the 


47 

consent  given  by  the  plaintiffs  survived  the  attempted 
abandonment  of  the  railway  upon  Washington  avenue." 

The  Federal  court  in  New  York  reached  the  same  con- 
clusion.    {Thompson  vs.  Schenectady,  131  Fed.  577.) 

Potwin  Place  vs.  Topeka  Ry.  Co.,  51  Kan.  609,  is  a 
case  where  a  street  railway  company  was  compelled  by 
mandamus  to  operate  a  street  railway  which  it  had  aban- 
doned. 

King  vs.  Severn  &  Wye  Ry.  Co.,  2  B.  &  Aid.  646,  is  an 
English  case  where  a  railroad  company  was  compelled  by 
mandamus  to  restore  a  road  it  had  taken  up. 

Speaking  of  a  street  railway,  Chief  Justice  Shaw,  iu 
Commomoealth  vs.  Temple,  14  Gray,  69,  76,  said: 

"The  accommodation  of  travelers,  of  all  who  have  oc- 
casion to  use  them,  at  certain  rates  of  fare,  is  the  lead- 
ing object  and  public  benefit  for  which  these  special 
modes  of  using  the  highway  are  granted  and  not  the 
profit  of  the  proprietors.  The  profit  to  the  proprietors 
is  a  mere  mode  of  compensating  them  for  the  outlay  of 
capital  in  providing  and  keeping  up  this  public  ease- 
ment." 

In  Fanning  vs.  Osborne,  102  iV.  Y.  441,  a  street  rail- 
way company  abandoned  a  portion  of  its  road,  and  turned 
it  over  to  Osborne  to  use  for  the  passage  of  freight  cars 
to  his  manufacturing  establishment. 

Held: 

(1)  The  right  to  construct  and  operate  a  street  rail- 
way is  a  franchise  which  must  have  its  source  in  the  sov- 
ereign power. 

(2)  The  legislative  power  over  the  subject  is  subject 
to  the  limitation  tliat  the  franchise  must  be  granted  for 
public,  and  not  for  private  purposes,  or  at  least  public 


48 

considerations   must  enter   into  every  valid   grant   of  a 
right  to  appropriate  a  public  street  for  railroad  uses. 

(3)  The  construction  and  maintenance  of  a  street 
railway  by  any  individual  or  association  of  individuals, 
without  legislative  authority  would  constitute  a  public 
nuisance,  and  subject  the  persons  maintaining  it,  not 
only  to  indictment,  but  also  to  private  action,  in  favor 
of  any  person  sustaining  special  injury. 

State  vs.  Dodge  City,  etc.,  Ry.  Co.,  53  Kan.  377:  The 
action  was  by  the  state  for  an  injunction  restraining 
the  railroad  company  from  tearing  up  and  removing  the 
track,  ties  and  iron  from  that  part  of  the  roadbed  of  the 
company  in  Gray  county. 

The  court  said: 

"While  the  title  to  a  completed  railroad  is  vested  in 
the  corporation,  it  is  only  private  property  in  a  quali- 
fied sense.  Railroads,  like  all  other  public  thorough- 
fares, are  public  instrumentalities.  The  power  to  con- 
struct and  maintain  railroads  is  granted  to  corporations 
for  a  public  purpose.  The  right  to  exercise  the  very 
high  attributes  of  sovereignty,  the  power  of  eminent  do- 
main and  of  taxation,  to  further  the  construction  of 
railways,  could  not  be  granted  to  aid  a  purely  private 
enterprise.  The  railway  corporation  takes  its  franchises 
subject  to  the  burden  of  a  duty  to  the  public  to  carry  out 
the  purpose  of  the  charter.  The  road,  when  constructed, 
becomes  a  public  instrumentality,  and  the  roadbed,  sup- 
erstructure and  other  permanent  property  of  the  corpor- 
ation are  devoted  to  the  public  use.  From  this  use 
neither  the  corporation  itself,  nor  any  person,  company 
or  corporation  deriving  its  title  by  purchase,  either  at 
voluntary    or   judicial    sale,    can    divert   it    without    the 


49 

assent  of  the  state.  It  matters  not  whether  the  enter- 
prise as  an  investment  be  profitable  or  unprofitable,  the 
property'  may  not  be  destroyed  without  the  sanction  of 
tliat  authority  which  brought  it  into  existence.  Without 
legislative  sanction,  railroads  could  not  be  constructed. 
When  once  constructed,  they  may  only  be  destroyed  with 
the  sanction  of  the  state.  The  legislature  unquestionably 
has  the  power  to  authorize  the  abandonment  of  railroads 
when  th'cy  cease  to  be  of  public  utility.  It  may  be,  also, 
that  in  an  action  prosecuted  by  the  attorney  general,  on 
behalf  of  the  state,  to  forfeit  the  charter  and  wind  up  the 
affairs  of  a  railroad  corporation,  for  any  proper  cause, 
the  court  might  make  all  necessary  orders  for  the  disposi- 
tion of  the  property  of  the  company;  but  in  this  case  the 
state  appeared,  by  the  county  attorney  of  the  county 
in  which  the  road  was  located,  protesting  against  the 
removal  of  the  superstructure  of  the  road.  The  court 
erred  in  refusing  the  injunction  asked. 

"The  general  propositions  stated  above  are  abundantly 
supported  by  authority:  E.  d  N.  E.  Rd.  Co.  vs.  Casey, 
26  Pa.  287;  The  State  vs.  S.  C.  &  T.  R.  R.  Co.,  7  Neh. 
357;  People  vs.  L.  &  N.  Rid.  Co.,  10  N.  E.  Rep.  {Ill), 
657;  Railroad  Comm'rs  vs.  P.  &  0.  C.  Rid.  Co.,  63  Me. 
269;  RaAlway  Company  vs.  Mining  Co.,  68  III.  489; 
Gates  vs.  Railroad  Co.,  53  Conn.  SSS;  Thomas  vs.  Rail- 
road Co.,  101  U.  S.  71;  Railroad  Co.  vs.  Winans,  17  How. 
30 ;  Pierce  vs.  Emery,  32  N.  H.  484 ;  People  vs.  N.  Y.  C. 
d  H.  R.  Rid.  Co.,  28  Hun.  543. 

"These  views  are  also  in  accordance  with  prior  de- 
cisions of  this  court:  Commr's  of  Leavenicorth  Co.  vs. 
Miller,  7  Kas.  479;  St.  J.  d  D.  C.  Rid.  Co.  vs.  Ryan,  11 
id.  603;  The  State  ex  rel  vs.  Bridge  Co.,  22  id.  438;  City 
of  Potwin  Place  vs.  Topeka  Ry.  Co.,  51  id.  609." 


50 

The  Supreme  Judicial  Court  of  Massachusetts  refused 
to  grant  a  mandamus  to  compel  a  street  railway  com- 
pany of  small  capital  and  limited  resources  to  operate  a 
branch  line  which  was  not  an  integral  part  of  its  main 
system  and  which  did  not  have  sufficient  patronage  to 
meet  its  running  expenses.  (Selectmen  of  Ameshury  vs. 
Citizens  Electric  St.  Ry.,  199  M(vss.,  394.) 

The  charter  held  by  the  company  and  the  laws  of  the 
state  provided  for  the  approval  of  the  location  of  street 
railwa;y's  by  the  Board  of  Aldermen  of  a  city  or  the  Se« 
lectmen  of  a  town,  who,  after  the  expiration  of  one  year 
from  Xh^  opening  for  use  of  a  street  railway  in  their  city 
or  town,  were  authorized  to  revoke  the  location,  and  com- 
pel the  company  to  remove  its  tracks  and  put  the  street 
in  as  good  condition  as  it  was  in  immediately  before 
being  occupied  by  the  track.  {Public  Stat,  of  Mass.  1882, 
p.  645,  646). 

The  Court  based  its  decision  on  the  precarious  nature 
of  the  rights  of  the  company  in  the  streets,  as  the  com- 
pany held  "its  location  upon  the  public  w^ay®,  without 
having  any  estate  of  its  own, in  the  lands." 

It  does  not  appear  by  the  report  of  the  case  whether 
at  the  time  of  making  the  locations  an  agreement  be- 
tween the  company  and  the  local  authorities  was  entered 
into  fixing  the  rate  of  fare.  In  the  absence  of  such  an 
agreement  the  board  of  directors  of  the  company  were 
authorized  to  establish  the  rates  of  fare,  but  their  action 
was  subject  to  revision  by  the  board  of  railroad  commis- 
sioners, on  the  application  of  the  aldermen  or  selectmen 
or  fifty  legal  voters  of  the  city  or  town ;  subject,  however, 
to  the  restriction  that  the  fares  should  "not  without  the 
consent  of  the  company,  be  so  reduced  as  to  yield,  with 
other  profits  derived  from  operating  its  road,  an  income 
of  less  than  ten  per  cent  upon  the  actual  cost  of  the  con- 


51 

struction  of  the  road  and  the  purchase  of  property  for 
its  necessary  use."  {Id.  p.  648.) 

The  public  can'  have  but  little  interest  in  a  street  rail- 
way that  it  does  not  patronize  to  an  extent  sufficient  to 
pay  operating  expenses;  and  this  is  an  explanation  of  the 
reasons  which  actuated  the  Court  in  denying  the  manda- 
mus prayed. 

Mr.  Walter  S.  Allen  was  secretary  of  the  Massachu- 
setts Special  Street  Kailway  Commission  of  1897,  and  in 
his  brochure  on  street  railway  franchises  in  Massachu- 
setts, he  said: 

"It  may  be  well  here  to  note  the  fact  that  the  control 
of  the  streets  and  highways  in  Massachusetts  rests  in'  the 
Legislature,  and  that  the  Courts  have  repeatedly  held 
that  when  acting  on  questions  concerning  these,  the  alder- 
men are  not  acting  as  municipal  representatives  but  as 
the  direct  servants  of  the  Legislature  which  has  by  stat- 
ute delegated  certain  of  its  powers  to  them." 

Again : 

"As  regards  the  tenure  of  franchises,  the  existence  of 
perpetual  revokable  franchises  was  seen  by  the  special 
committee  to  be  an  anomaly,  but  they  had  worked  well 
under  Massachusetts  conditions,  and  in  practice  but  two 
attempts  had  been  made  to  revoke  franchises.  In  both 
cases  public  opinion  caused  the  speedy  repeal  of  the  revo- 
cation order." 

The  Massachusetts  statutes  now  provide  that  if  not 
consented  to  by  the  company  an  order  of  revocation  shall 
not  be  valid  until  approved  by  the  board  of  railroad  com- 
missioners. {Acts  and  Resolves  of  Mass.,  1898,  Chap. 
578,  Sec.  17;  2  Rev.  Laws  of  Mass.,  1902,  p.  1051,  Sec. 
32;  Id.  Sup.  1906,  p.  665,  Sec.  66.) 

It  is  also  provided  that  the  directors  of  a  street  rail- 
way company  may  establish  rates  of  fare,  and  freight, 


.    52 

but  subject  to  revision  and  alteration  by  the  general 
court  (stat,e  legislature)  or  bj  such  officers  or  persons 
as  it  ma  J  appoint  for  that  purpose.  (2  Rev.  Laws  of 
Mass.,  1902;  p.  1029,  Sec.  225;  p.  1059,  Sec.  73;  Id.  Sup. 
of  1906,  p.  773,  Sec.  96.) 

The  course  of  the  legislation  which  resulted  in  taking 
the  rates  of  fare  out  of  the  control  of  tbe  aldermen'  and 
selectmen  is  shown  by  the  case  of  Keefe  ^•s.  Lexington 
and  Boston  Street  Railway,  185  Mass.,  183,  in  which  the 
Court  said : 

"Knowlton,  C.  J.  The  plaintiff  seeks  to  recover  five 
cents  paid  under  protest  for  his  fare,  demanded  by  the 
conductor  on  one  of  the  defendant's  cars.  The  defendant 
corporation  was  organized  under  the  laws  of  this  Com- 
monwealth, after  tiie  St.  1898,  c.  578,  went  into  effect. 
The  selectmen  of  the  town  of  Concord  and  the  selectmen 
of  the  town  of  Bedford,  in  granting  the  defendant  a  lo- 
cation m  their  respective  towns,  prescribed  conditions 
as  to  the  fares  that  might  be  charged  for  the  transporta- 
tion of  passengers  within  the  limits  of  tJie  town.  The 
plaintiff  contends  that  the  fare  charged  and  collected  in 
his  case  was  in  violation  of  these  conditions.  The  first 
and  most  important  question  before  us  is  whether  such  a 
condition  could  be  imposed  legally  by  a  board  of  select- 
men in  granting  a  location. 

"Under  the  St.,  1898,  c.  578,  Sec.  13,  the  board  of  al- 
dermen- of  a  city  or  the  selectmen  of  a  town,  in  granting 
a  location  to  a  street  railway  company,  may  prescribe 
the  manner  in  which  the  "tracks  shall  be  laid,  and  the 
kind  of  rails,  poles,  wires,  and  other  appliances  w'hich 
shall  be  used,  and  they  may  also  impose  such  other  terms, 
conditions  and  obligations  in  addition  to  tJiose  applying 
to  all  street  railways  under  the  general  provisions  of  law, 
as  the  public  interest  may  in  their  judgment  require." 
The  question  is  whether  a  condition  may  be  imposed  reg- 


53 

ulating  and  restricting  the  fares  to  be  charged.  The  stat- 
ute contains  other  provisions  in  regard  to  fares.  By  the 
Pub.  Sts.  c.  113,  Sec.  43,  which  was  in  force  when  the 
defendant  corporation  was  organized  (R.  L.  c.  112,  Sec. 
69)  the  directors  of  a  street  railway  company  "may  es- 
tablish the  rates  of  fare  on  all  passengers  and  property 
conveyed  or  transported  in  its  cars,  subject,  however,  to 
the  limitations  named  in  its  charter,  or  hereinafter  set 
forth."  Section  44  provided  for  a  revision  and  regula- 
tion of  the  fares  by  the  railroad  commissioners,  and  Sec. 
45  provided  that  nothing  contained  in  the  two  preceding 
sections  should  authorize  the  company  or  the  board  to 
raise  the  rate  of  fare  above  the  rate  established  by  agree- 
ment, made  as  a  condition  of  location  or  otherwise,  be- 
tween the  company  or  its  directors  and  the  mayor  and 
aldermen  of  a  city  or  the  selectmen  of  a  town,  except  by 
a  mutual  arrangement  with  the  parties.  This  section  rec- 
ognized the  validity  of  such  agreements  under  the  former 
statute.  But  this  and  the  next  preceding  section  were 
repealed  by  the  St.  1898,  c.  578,  Sec.  26,  leaving  the  sec- 
tion as  to  the  authority  of  the  directors  to  stand  with  no 
limitations  upon  their  right.  A  new  section  in  regard  to 
the  revision  of  the  fares  by  the  railroad  commissioners 
was  enacted,  which  is  St.  1898,  c.  578,  Sec.  23.  Under 
this  last  section,  the  "fares  shall  not,  without  the  consent 
of  the  company,  be  reduced  below  the  average  rate  of  fare 
charged  for  similar  service  by  other  street  railway  com- 
panies which,  in  the  judgment  of  the  board  of  railroad 
commissioners,  are  operated  under  substantially  similar 
eonditions."  This  statute  gives  to  the  directors  prima- 
rily the  right  to  fix  and  regulate  fares.  It  then  makes 
their  action  subject  to  revision  by  the  railroad  commis- 
sioners, who  are  to  act,  according  to  the  terms  of  the 
section,  upon  broad  consideration®  of  public  policy.  The 
conditions  which  may  be  imposed  in  granting  a  location 


54 

are  of  a  different  character,  and  do  not  include  those  for 
which  special  provision  is  made  in  other  parts  of  the 
statute.  See  Newcomh  vs.  Norfolk  Western  Street  Rail- 
way, 179  Mass.,  449.  With  street  railways  extending  long 
distances  and  passing  through  numerous  cities  and 
towns,  it  would  be  unwise  and  inexpedient  to  permit  each 
town  to  fix  the  fares  within  its  boundaries,  as  a  condition 
of  granting  a  location.  The  purpose  of  the  Legislature  to 
prescribe  broad  and  general  provisions  for  the  regulation 
of  fares  is  further  emphasized  by  the  St.  1901,  c.  180  (K. 
L.  c.  112,  Sec.  73.)  Which  puts  street  railways  upon 
precisely  the  same  ground  as  railroads,  as  to  provisions 
relative  to  changes  and  regulations  of  their  fares. 

"The  acceptance  by  the  defendant  of  the  locations 
granted  by  these  towns  did  not  make  valid  these  condi- 
tions as  to  fares  which  the  towns  could  not  legally  im- 
pose, nor  did  it  make  a  contract  as  to  fares  between  the 
corporation  and  the  selectmen,  or  the  town.  The  defendant 
might,  therefore,  at  least  prescribe  for  its  passengers  the 
payment  of  any  fare  which  was  reasonable.  It  is  not 
contended  that  the  fare  collected  of  the  plaintiff  was 
more  than  was  reasonable,  or  more  than  the  company 
was  accustomed  to  collect  from  other  passengers  who 
were  traveling  as  he  was.  Indeed,  it  is  contended  by  the 
defendant  that  it  has  complied  with  the  terms  prescribed 
by  these  towns,  according  to  a  proper  understanding  of 
them,  certainly  according  to  its  own  understanding  of 
them,  and  that  the  charge  complained  of  by  the  plaintiff 
was  for  a  through  passenger,  to  whom  these  conditions 
were  not  intended  to  apply. 

"We  need  not  consider  this  contention  particularly,  as 
we  deem  it  unimportant.  The  plaintiff,  in  his  brief,  does 
not  contend  that  he  is  entitled  to  recover,  except  upon 
the  ground  that  the  conditions  imposed  as  to  fares  were 
binding  upon  the  defendant." 


55 

III. 

The  streets  and  highways  of  the  city  of  Detroit  are 
not  the  property  of  the  city,  or  of  the  inhabitants  of 
the  city.  They  belong  to  the  general  public,  that  is, 
to  the  people  of  the  state  and  their  visitors  from  other 
states  and  countries.  So  far  as  the  municipal  authori- 
ties have  been  given  any  title  to  or  power  of  control 
over  the  streets,  the  same  is  held  in  trust  for  the 
benefit  of  the  general  public;  and  any  ordinance  or 
resolution  of  the  common  council  which  would  be 
detrimental  to  the  general  public,  would  be  a  breach 
of  the  trust,   and   illegal   and   void. 

This  is  universal  law  in  the  United  States. 

The  Michigan  town  plat  law  has  been  in  force  since 
1839.     (1  C.  L.  1897,  p.  1038.) 

That  act  originally  vested  the  fee  of  the  streets  in  the 
county;  it  now  vests  it  in  the  township,  village  or  city; 
but  it  has  always  provided,  that  the  fee  should  be  held  in 
trust  for  the  public. 

In  People  vs.  Kerr,  27  N.  Y.,  188,  it  was  held  that  the 
title  in  fee  to  the  streets  in  the  city  of  New  York,  was 
held  by  the  city  in  trust  for  the  public. 

The  Court  said: 

"Whatever  may  be  the  quantity  or  th«  quality  of  the 
estate  of  the  city  of  New  York  in  its  streets,  that  estate 
is  essentially  public  and  not  private  property,  and  the 
city  in  holding  it  is  the  agent  and  trustee  of  the  public 
and  not  a  private  owner  for  profit  or  emolument." 

To  same  effect:   (Glasgow  vs.  St.  Louis,  87  Mo.,  678.) 

While  the  city  of  New  York  owns  the  fee  of  the  lands 
occupied  by  the  streets  of  that  city,  whether  laid  out 
under  the  Dutch  regime,  during  the  colonial  period,  or 


56 

after  the  organization  of  the  state  government,  its  ten- 
ure is  in  trust  for  street  uses.  {Kane  vs.  N.  Y.  E.  R.  R., 
125  N.  Y.,  182.) 

In  People  vs.  Albcmy,  4  Hun.,  675,  679,  it  was  held  that 
the  city  could  sell  a  ferry  property  to  a  bridge  company 
— "but  property  of  a  public  nature  such  as  streets, 
ssquares  and  parks,  so  long  as  they  are  held  for  the  public 
use,  can  not  be  sold.  Doubtless  the  same  rule  would  ap- 
ply to  a  ferry  franchise  if  the  public  were,  by  its  sale,  to 
be  shut  off  from  means  of  intercommunication." 

In  Rhinehart  vs.  Redfield,  93  App.  Div.  (N.  Y.),  410 
(affirmed  179  X.  Y.,  569),  the  common  council  of  Brook- 
lyn granted  to  private  parties  the  power  to  lay  pipes  in 
the  streets  for  the  conveying  of  gas  generated  from  am- 
monia to  houses  and  buildings  for  the  purx)ose  of  refrig- 
eration and  it  appeared  that  the  grant  was  made  in  aid 
of  a  private  enterprise  and  not  for  the  convenience  of  the 
general  public,  but  for  a  limited  number  of  people  within 
a  limited  district. 

Held,  that  the  grant  was  void  as  beyond  the  power  of 
the  common  council,  it  being  fundamental  that  a  muni- 
cipal corporation  holds  its  public  streets  and  places  in 
trust  for  the  public. 

Knickerhocker  Ice  Co.  vs.  4:2nd  St.  R.  R.  Co.,  176  N.  Y., 
408,  417,  involved  the  title  to  a  pier  and  the  lands  occu- 
pied by  it,  at  Forty-third  street  and  the  Hudson  river  in 
New  York  city. 

In  disposing  of  the  case  the  Court  said: 

"There  are  several  fundamental  facts'  which  must  be 
kept  in  view  in  the  effort  to  adjust  the  rights  of  the  par- 
ties to  this  litigation.  First.  The  title  of  the  city  of  New 
York  in  the  tideway  and  the  submerged  lands  of  the  Hud- 


57 

son  river  granted  under  the  Dongan  and  Montgomerie 
charters  and  the  acts  of  the  legislatures  of  1807,  1826 
and  1837,  was  not  absolute  and  unqualified,  but  was  and 
is  held  subject  to  the  right  of  the  public  to  the  use  of  the 
river  as  a  water  highway.  {Sage  vs.  Mayor,  etc.,  of  N. 
Y.,  154  lY.  Y.,  70;  Matter  of  City  of  New  Yark,  168  N.  Y. 
139.)  Second.  The  title  of  the  city  of  New  York  in  and 
to  the  lands  within  its  public  streets  is  held  in  trust  for 
public  use.  (Story  vs.  N.  Y.  El.  R.  R.  Co.,  90  N.  Y.,  122; 
Kane  vs.  N.  Y  El.  R.  R.  Co.,  125  N.  Y-,  165.)  Third.  The 
general  public  has  a  right  of  passage  over  the  places 
where  land  highways  and  navigable  waters  meet;  and 
when  a  wharf  or  bulkhead  is  built  at  the  end  of  a  land 
highway  and  into  thet  adjacent  waters,  the  highway  is  by 
operation  of  law  extended  by  the  length  of  the  added 
structure.  [People  vs.  Lamhler,  5  Denio,  9;  Master  of 
the  City  of  Brooklyn,  73  N.  Y.,  179.)  Fourth.  It  was 
competent  for  the  Legislature  in  granting  additional  sub- 
merged lands  to  the  city  of  New  York  in  1837,  to  pre- 
scribe that  such  lands  should  be  used  for  the  purposes  of 
an  exterior  street,  to  which  other  streets  then  intersect- 
ing the  river  should  be  extended." 

In  Sweet  vs.  Buffalo,  79  N.  Y-,  293,  the  city  was  au- 
thorized to  condemn  the  fee  of  lands  for  the  purpose  of 
maintaining  a  sea  wall  or  breakwater. 

The  Court  in  an  opinion  by  Andrews,  J.,  said : 

"But  we  perceive  no  inconsistency  in  declaring  tJie  par- 
ticular use  for  which  the  city  is  to  take  and  hold  the  land 
and  at  the  same  time  providing  that  it  should  take  a  fee. 
The  particular  use  declared  is  in  the  nature  of  a  trust 
engrafted'  on  the  fee,  and  the  people  through  its  proper 
officer  could  compel  the  city  to  observe  the  trust,  or  re- 
strain it  from  any  use  of  the  land  inconsistent  with  it." 


58 

The  Supreme  Court  of  Ohio  in  Elster  vs.  Springfield, 
49  Ohio  St.,  82,  97,  said : 

"The  municipality  is  given  the  exclusive  care,  super- 
vision and:  control  of  the  streets.  Hand  in  hand  with  this 
I)Ower  goes  a  corresjwnding  duty  to  keep  them  open,  in 
repair,  and  free  from  nuisance.  This  implies  a  duty  to 
see  that  the  right  of  the  puWic  therein  is  not  encroached 
upon.  An  encroachment  which  would  prevent  the  rea- 
sonable use  of  the  street  by  the  municipality  would  be  a 
nuisance,  and  power  to  validate  such  nuisance  by  a  grant 
would  be  utterly  inconsistent  with  the  duty  enjoined  to 
keep  the  street  free  from  nuisance. 

"As  we  have  seen,  the  city  as  to  its  streets,  is  a  trustee 
for  the  use  of  the  public.  A  trustee  of  property  for  the 
benefit  of  the  public  could  not,  any  more  than  could  a 
trustee  of  private  property  held  for  known  specific  and 
continuing  uses,  alien  or  encumber  the  proi)erty  to  the 
prejudice  of  the  beneficiary."  etc. 

In  Gleasan  vs.  Cleveland,  49  Ohio  St-,  431,  it  was  held 
that  the  donation  of  the  "Public  Square"  in  Cleveland 
was  not  made  to  the  city  but  to  the  public  generally,  and 
the  Legislature  could  authorize  the  erection  of  a  soldier's 
monument  thereon  without  the  consent  of  the  city. 

The  very  recent  case  of  Louisville  <&  Nashville  Railroad 
Company  vs.  City  of  Cincinnati,  76  Ohio,  481,  applies  this 
doctrine  to  a  grant  made  by  the  city  to  the  railroad  com- 
pany to  build  elevated  railroad  track  across  a  public 
common  or  landing. 

At  p.  504  the  court  say : 

"This  property  was  not  given  to  Cincinnati  to  be  used 
or  disposed  of  as  it  might  determine  to  be  for  its  best 
interests,  but  it  was  dedicated  to  the  inhabitants  of  the 
town,  long  before  the  state  had  an  existence,  for  the  pur- 
poses of  a  common,  and  while  the  l^al  title  now  is  vest- 


59 

ed  in  tlie  city  it  is  held  by  the  city  in  trust  for  the  inhab- 
itants for  that  purpose,  and  when  the  property  is  no 
longer  desired  or  the  purpose  for  which  it  was  dedicated 
attainable,  it  will  revert  to  the  dedicator.  Until  then, 
its  diversion  from  that  use  by  the  city,  or  by  the  l^sla- 
ture,  may  be  prevented  by  owners  of  lots  whose  property 
rights  may  be  affected  and  by  the  city  solicitor  as  the 
representative  of  the  inhabitants." 

Marine  Ins.  Co.  vs.  St.  L.  etc.,  Ry.  Co.,  41  Fed.,  648, 
649,  involved  the  validity  of  a  lease  by  the  municipality 
of  the  foot  of  a  street. 

Caldwell,  District  Judge,  said : 

"I  have  had  no  difficulty  in  excluding  the  lease  from 
the  city  council.  To  say  nothing  ahout  the  clause  against 
assignment  of  the  lease,  it  was  plainly  ultra  vires,  and 
void.  The  streets  of  the  city  do  not  belong  to  the  coun- 
cil, but  to  the  public — and  by  that  I  mean  the  public  at 
large,  and  not  merely  the  inhabitants  of  the  city, — and 
to  their  use  they  are  forever  dedicated.  The  city  charter 
makes  it  the  duty  of  the  city  council  to  keep  them  open 
and  free  from  nuisance.  It  provides  that  the  city  coun- 
cil shall  have  the  care,  supervision,  and  control  of  all  the 
public  highways,  bridges,  streets,  alleys,  public  squares, 
and  commons  within  the  city;  and  shall  cause  the  same 
to  be  kept  open  and  in  repair,  and  free  from  nuisance,' 
See  Mansf.  Dig.,  737.  The  only  legal  effect  of  the  lease, 
it  would  seem,  is  to  render  the  city  liable  for  the  damages 
resulting  from  such  a  licensed  nuisance.  Cleveland  vs. 
King,  132  JJ.  S.,  295,  10  Sup.  Ct.  Rep.,  90.  It  makes  no 
difference  that,  owing  to  the  declivity  at  the  foot  of  Main 
street,  the  street  at  that  point  was  not  commonly  fre- 
quented by  vehicles.  The  requirements  of  the  public  as 
to  property  set  aside  for  its  perpetual  use  was  not  a  mat- 
ter to  be  passed  on  by  the  council,  and  it  is  plain  that, 


GO 

by  the  establishment  of  a  ferrj  or  the  building  of  a  bridge 
at  that  point,  it  might  at  any  time  become  one  of  tht» 
most  frequented  of  all  the  thoroughfares  of  the  citj,  the 
expansion  and  amelioration  of  which  cannot  be  hindered 
bj  leases  of  the  streets  by  the  city  council.  The  law  is 
well  settled,  as  it  ought  to  be,  that  all  such  leases  are 
void.  (2  Dill  Mun.  Corp.,  §660;  McDonald  vs.  Major,  {N. 
J.)  1  Atl.  Rep.,  855;  Harrishurg's  Appeal  (Pa.),  10  Atl. 
Rep.,  787;  Gas  Co.  vs.  Teel,  20  Ind.,  131).-' 

Nordhurst  vs.  Ft.  Wayne  d  S.  W.' Traction  Co.,  163 
Ind.,  268,  is  a  case  where  the  Supreme  Court  of  Indiana 
examined  with  care  the  question  whether  an  interurban 
electric  railway  was  an  additional  burden  on  the  high- 
ways, and  in  tine  course  of  an  opinion  holding  that  it  was 
not,  said: 

"A  street  platted  or  otherwise  laid  out  in  a  city  or 
tovm  of  this  state  is  thereby  dedicat-ed  to  the  use  of  the 
public,  and  not  exclusively  to  the  use  of  abutting  proi>- 
erty,  nor  to  the  convenience  or  profit  of  any  or  all  of  the 
inhabitants  of  the  particular  municipality.  It  forms  a 
part  of  the  great  system  of  highways  of  ihe  state,  and  its 
use  for  inter-communication  with  other  neighborhoods, 
towns,  and  cities  is  one  of  its  riiost  imjyortant  purposes. 
In  many  respects  it  is  governed  by  the  general  laws  reg- 
ulating public  ways.  Discriminations  in  the  tei*ms  and 
conditions  on  which  it  could  be  used  in  favor  of  the  abut- 
ting lot  owTiers,  the  residents  on  the  particular  street,  or 
the  inhabitants  of  the  city,  and  ♦  *  ♦  against  non- 
residents, could  not  be  tolerated."     *     *     * 

"Rapid  and  cheap  transportation  of  passengers,  light 
express  and  mail  matter  between  neighboring  towns  and 
cities  may  be  quite  as  necessary  and  as  largely  conducive 
to  the  general  welfare  of  the  places  so  connected  and 
their  inhabitants  as  the  like  conveniences  within  tie 
town  or  city." 


m 

A  bridge  owned  by  a  county  is  public  property  and  the 
county  is  not  entitled  to  compensation  if  the  legislature 
appropriates  it  to  public  use  by  a  turnpike  company. 
{Freeholders  of  Monmouth  Co.,  vs.  Turnpike  Co.,  18  N. 
J.  Eq.,  91). 

In  McDonald  vs.  Neuxirk,  42  N.  J.,  136,  it  was  held 
that  the  city  could  not  authorize  the  use  of  the  streets 
for  the  purpose  of  a  market. 

A  like  ruling  was  made  in  Pennsylvania :  ( Citi/  of  Har- 
rishurg's  Appeal,  10  Atl.,  787. 

In  Fessler  vs.  Toicn  of  Union,  67  If.  J.  Eq.,  14,  27,  the 
town  erected  a  building  on  a  square  devoted  to  the  public 
use  as  a  park  or  pleasure  ground. 

The  court  said : 

"If  as  I  hold,  the  defendant  was  without  authority  to 
erect  buildings  on  the  square,  then  their  so  doing  was  a 
breach  of  the  trust  on  which  it  held  the  right  of  posses- 
sion, and  the  control  of  this  property;  and  it  is  hardly 
necessary  to  say  that  the  law  ought  to  be,  and  is,  that  a 
trustee  shall  not  be  permitted  to  gain  any  advantage  or 
increase  his  power  by  a  breach  of  his  trust  unless  it  be, 
and  that  necessarily  to  a  limited  degree,  where  the 
breach  has  been  approved  and  acquiesced  in  by  the  cestui 
que  trust." 

Roberts  vs.  Louisville,  92  Ky.,  95,  is  a  case  concerning 
the  public  wharves  owned  by  the  city,  and  it  was  held 
that  the  city  was  a  mere  trustee  for  the  public;  that  its 
duties  and  obligations  to  the  public  and  individuals  could 
no  be  ignored  or  shifted;  that  the  municipality  was  bound 
"to  maintain  and  preserve  wharf  property  for  the  benefit 
of  the  public  without  discrimination  or  unreasonable 
charges  for  individual   use;"   and  that   the  title  of   the 


62 

city  was  held  "in  trust  for  use  of  the  public  and  in  aid 
of  trade  and  commerce." 

In  Lahry  vs.  Gilmowr,  89  S.  W.,  231,  the  Court  of  Ap- 
peals of  Kentucky  held  that  the  authorities  of  a  munici- 
pal corporation  hold  the  public  ways  of  the  city  in  trust 
for  the  use  of  the  public  and  cannot  sell  or  lease  them  for 
private  use. 

To  same  effect:  Bennett  vs.  Mt.  Vernon,  124  la-,  537. 

In  Dubuque  vs.  Moloney,  9  la.,  450,  it  was  said: 
"The  city,  by  virtue  of  its  corporate  authority,  has  the 
power  to  regulate  the  public  use  of  the  streets  and 
squares  and  may  be  regarded  as  the  representative  of  the 
public  for  the  purpose  of  vindicating  the  public  right. 
But  neither  the  ownership  of  the  soil,  nor  of  the  ease- 
ment is  in  the  corporation." 

In  Sherburne  vs.  Portsmouth,  72  'N.  H.,  539,  the  court 
sustained'  a  bill  to  enjoin  the  city  from  making  a  baseball 
park  on  the  public  common  known  as  the  Plains  and  on 
the  ground  that  such  action  would  be  a  breach  of  trust 

Speaking  of  public  ways,  Elliott  on  Roads  and  Streets, 
2d  Ed.,  Sec.  442,  says: 

"The  ownership  of  the  easement  is  exclusively  in  the 
public  for  whom  the  governmental  corporation  is  trustee, 
and  as  such  trustee  it  is  in  duty  bound  to  protect  the 
rights  of  the  beneficiary." 

In  San  Fra/ncisco  vs.  Itsell,  80  Gal.,  57,  it  was  held 
that  the  city  of  San  Francisco  holds  its  public  squares 
in  trust  for  the  public  and  the  municipal  authorities  have 
no  power  to  dispose  of  them  by  way  of  compromise  or  in 
any  other  manner  and  the  legislature  has  no  power  to 
ratify  an  ordinance  disposing  of  land  irranted  to  the  city 
to  be  held  in  trust  for  the  public. 


63 

In  Oakland  vs.  Oakland  Water  Front  Co-,  188  Cal, 
160,  the  same  doctrine  was  applied  to  the  title  vested  in 
the  Oity  of  Oakland  to  the  water  front  of  that  city. 

Townsend  vs.  Epstein,  93  Md.,  537,  555,  is  a  case  where 
the  city  had  authorized  a  structure  over  a  street,  and 
seventeen  feet  above  it,  to  connect  the  upper  stories  of 
buildings  on  opposite  sides  of  the  street. 

The  court  said: 

"The  Corporation,  the  "Mayor  and  City  Council  of  Bal- 
timore, is  invested  with  the  title  to  and  control  over  the 
public  streets.  This  control,  however,  is  not  an  arbitrary 
control.  The  streets  and  highways  are  held  in  trust  for 
the  benefit,  use,  and  convenience  of  the  general  public. 
There  are  many  ways  in  which  the  power  to  control  and 
r^ulate  the  use  of  the  streets  can  be  and  must  be  exerted 
by  the  municipality  to  meet  the  necessities  and  the  con- 
venience of  an  urban  population;  but  the  exertion  of  this 
power  must  have  for  its  object  a  public  purpose.  It  is 
not  in  accord  with  the  trust  upon  which  the  municipality 
holds  the  streets,  nor  with  the  nature  of  the  control  which 
it  has  over  them  to  make  use  of  the  power  and  authority 
with  which  it  is  invested  in  that  regard  to  promote  a 
mere  private  purpose,'  to  subserve  a  mere  private  interest 
or  to  subordinate  the  right  of  one  citizen  in  the  streets, 
or  in  a  street  of  the  city  to  the  private  interest  and  con- 
venience of  any  other." 

In  Beehe  vs.  lAttle  Rock,  68  Ark.,  39,  68,  it  was  said: 

"It  is  the  duty  of  a  city  to  open  and  keep  in  repair  its 
streets,  and  it  may  be  compelled  to  do  so  by  a  proper  pro- 
ceeding at  the  instance  of  a  proper  party ;  and  a  city  can 
not  divert  the  grounds  given  for  streets  to  other  uses,  but 
if  it  does,  its  unlawful  or  n^ligent  acts  can  not  divest 
the  cestui  que  trust — the  public — of  title  in  the  streets." 


64 

In  Simon  vs.  Nm^throp,  27  Oreg.,  487,  it  was  held  that 
the  public  highways  of  a  city  are  not  its  private  property, 
and  henee  the  legislature  may  transfer  their  supervision 
and  control  to  another  governmental  agency  if  it  does 
not  thereby  divert  them  to  a  use  substantially  different 
from  that  for  which  they  were  originally  intended. 

In  F.  C.  &  P.  R.  R.  Co.  vs.  Ooala  Street  <&  Suburban, 
39  Fla.,  306,  320,  the  court  said : 

"The  correct  view  is  that  the  powers  of  a  municipal 
corporation  4n  respect  to  the  control  of  its  streets  are 
held  in  trust  for  the  public  benefit,  and  cannot,  unless 
clearly  authorized  by  a  valid  legislative  enactment,  be 
surrendered  or  delegated  to  private  parties  either  cor- 
Xwrate  or  natural.' " 

A  city  is  powerless  to  confer  a  right  so  to  use  its 
streets  as  to  hinder  or  obstruct  the  concurrent  use  by 
tlie  public  thereof,  ( Chicago^  etc.,  vs.  Quincy,  32  111.  App. 
377;  Dubach  vs.  Hanmbal,  etc.,  89  Mo.  483.) 

Action  of  a  city  council  in  vacating  a  platted'  street 
in  order  to  aid  defects  in  the  title  of  private  persons 
to  the  land  embraced  within  the  streets  so  as  to  enable 
such  parties  to  appropriate  and  use  the  street  for  private 
purjKJses  is  ultra  vires  and  void.  (Deland  vs.  Dixon 
Power  Co.,  225  III,  212.) 

The  trust  in  favor  of  the  public  is  so  strong,  that  an 
elevated  superstructure  for  the  use  of  the  public,  can  be 
built  in  a  street  without  compensation  to  abutting  lot 
owners.  (Samer  vs.  New  York,  180  N.  Y.  27;  S(mer  vs. 
New  York,  206  U.  S.,  536.) 

Abutting  property  owners  may  maintain  a  bill  to  en- 
join a  city  from  erecting  buildings  on  a  park  in  violation 


65 

of  the  trust  for  the  general  public  under  which  the  park 
is  held  T>y  the  city.    {Chicago  vs.  Ward,  169  III,  392.) 

A  city  cannot  grant  the  ix^rmanent  use  of  a  portion  of 
tlie  street  for  the  purposes  of  an  awning  over  a  street  en- 
trance.   (Hibhard  &  Co.  vs.  Chicago,  173  III.,  91.) 

Nor  the  right  to  use  a  well  in  the  public  streets.  (Sny- 
der vs.  Pulaski,  176  III.,  397.) 

Nor  the  exclusive  use  of  tlie  streets  by  a  railroad  com- 
pany.   {Chicago,  etc.  vs.  The  People,  222  III.,  427.) 

In  re  Albers  Petition,  113  Mich.,  640,  is  a  case  where' 
the  city  of  Grand  Kapids  claimed  compensation  for  the 
value  of  the  land  covered  by  a  street  which  was  vacated. 

The  court  in  an  opinion  by  Mr.  Justice  Hooker,  said: 

"Our  understanding  is  that  the  city  has  no  proprietary 
interest  in  tbe  land,  all  of  its  authority  over  it  growing 
out  of  its  legal  duty  to  maintain  the  public  ways  which 
are  placed  in  its  charge.  {City  of  Detroit  vs.  Railway 
Co.,  76  Mich.,  421.)" 

In  the  case  cited  a  street  railway  grant  was  involved 
and  the  court  by  CJampbell,  J.,  said : 

"The  cities  in  this  state  have  no  proprietary  interest 
in  city  streets  as  their  private  property,  and,  whether  the 
fee  is  nominally  in  county,  city,  or  private  owners,  the 
public  cnotrol  is  only  in  trust  to  secure  to  the  public 
those  rights  of  a  public  nature  that  exist  in  public  ways 
of  that  kind.  While  a  considerable  discretion  is  vested 
in  cities  concerning  the  terms  of  user,  and  the  proper 
rate  to  be  paid  to  the  city  for  permitting  it,  the  city  sells 
the  roads  none  of  its  property,  and  whatever  it  exacts 
must  necessarily  be  by  way  of  tax  or  license,  which  is 
the  same  thing." 


66 

In  Fairchild  vs.  St.  Paul,  46  Minn.,  540,  the  court  sus- 
tained a,  statute  authorizing  the  city  to  condemn  for 
streets  a  title  in  fee  simple  but  did  so  on  the  ground  that 
the  title  so  acquired  would  be  held  in  trust  for  the  pub- 
lic for  street  purposes ;  that  the  title  was  not  proprietary ; 
that  it  was  held  by  the  city  as  an  agency  of  the  state; 
and  that  the  city  could  neither  sell  the  land  or  devote  it 
t^  a  private  use. 

In  Massachusetts  great  ponds  containing  more  than  ten 
acres  were  made  public  to  lie  in  common  for  public  use, 
and  in  West  Roxhury  vs.  Stoddard,  7  Allen  158,  it  was 
held  that  the  township  had  no  such  property  in  the 
ice  on  Jamaica  Pond  as  would  enable  it  to  maintain  an 
action  against  individuals  for  trespass  in  cutting  ice 
therefrom,  even  if  the  fee  of  the  pond  be  considered  to 
be  in  the  town. 

A  township  does  not  own  the  highways  within  its  lim- 
its. The  easement  belongs  to  the  public  and  not  to  the 
township.  Hence  the  township  cannot  maintain  an  ac- 
tion for  an  injury  to  a  highway  until  it  has  made  repairs 
and  been  put  to  expense  in  regard  thereto.  (Freedom  vs. 
Weed,  40  if  e.,  383.) 

In  Denver  Circle  Ry.  Go.  vs.  Nester,  10  Colo.,  403,  a 
statute  vested  the  fee  of  the  streets  on  a  recorded  plat 
in  the  city  or  town  "in  trust  for  the  uses  tJiere  ex- 
pressed." 

The  Court  said: 

"The  alleged  power  of  the  city  to  authorize  the  occu- 
pation of  the  public  street  called  'Willow  Lane'  by  an 
ordinary  railroad  with  trains  of  cars  propelled  by  steam 
engines,  without  liability  for  injuries  to  property  occa- 
sioned by  the  construction  and  operation  of  the  railroad, 
seems  to  be  based  on  the  proposition  that  the  city,  by 


67 

virtue  of  the  dedication  mentioned,  was  vested  with  title 
to  the  streets  in  fee  absolute  under  the  statutes  then  in 
force.  This  proposition  is  defeated  hj  the  express  words 
of  the  statute  just  cited." 

A  resident  taxpayer  of  a  municipality  has  the  right  to 
maintain  a  suit  to  prevent  the  unlawful  disposition  by 
the  municipal  authorities  of  the  money  or  property  of 
the  town,  and  to  restrain  the  diversion  of  property  in  his 
town  from  any  public  use,  in  which  he  shares,  to  which 
it  has  been  dedicated. 

The  Colorado  Court  of  Appeals  so  held  in  a  case  where 
it  was  proi>osed  to  build  a  county  court  house  on  a  public 
square  in  Colorado  Springs.  {Mclntyre  vs.  El  Paso 
County,  15  Colo.  App.,  78,  88.) 

The  most  noted  case  to  be  found  in  the  books  in  which 
the  doctrine  for  which  we  contend  was  affirmed  and  ap- 
plied is  that  of  Illinois  Central  R.  R.  Co.  vs.  Illinois, 
146  U.  S.  387. 

In  that  case  the  legislature  of  the  state  had  passed  an 
act  granting  to  the  Illinois  Central  Railroad  Company 
title  in  fee  to  submerged  lands  in  Lake  Michigan  in  front 
of  the  city,  and  a  subsequent  legislature  had  repealed  the 
act. 

The  court  in  an  opinion  by  Mr.  Justice  Field,  said: 
"The  question,  therefore,  to  be  considered  is  whether 
the  Legislature  was  competent  to  thus  deprive  the  State 
of  its  ownership  of  the  submerged  lands  in  the  harbor 
of  Chicago,  and  of  the  consequent  control  of  its  waters; 
or,  in  other  words,  whether  the  railroad  corporation  can 
hold  the  lands  and  control  the  waters  by  the  grant, 
against  any  future  exercise  of  power  over  them  by  the 
State.  I 


68 

"That  tie  State  holds  the  title  to  the  lands  under  the 
navigable  waters  of  Lake  Michigan,  within  its  limits,  in 
the  same  manner  that  the  State  holds  title  to  soils  under 
tide  water,  by  the  common  law,  we  have  already  shown, 
and  that  title  necessarily  carries  with  it  control  over  the 
waters  above  them  whenever  the  lands  are  subjected  Uy 
use.  But  it  is  a  title  different  in  character  from  that 
which  the  State  holds  in  lands  intended  for  sale. 
It  is  different  from  the  title  which  the  United 
States  hold  in  the  public  lands  which  are  open 
to  pre-emption  and  sale.  It  is  a  title  held  in 
trust  for  the  people  of  the  State  that  they  may  enjoy  the 
navigation  of  the  waters,  carry  on  commerce  over  them, 
and  have  liberty  of  fishing  therein  freed  from  the  obstruc- 
tion or  interference  of  private  parties.  The  interest  of 
the  people  in  the  navigation  of  the  waters  and  in  com- 
merce over  them  may  be  improved  in  many  instances  by 
the  erection  of  wharves,  docks  and  piers  therein,  for 
which  purpose  the  State  may  grant  parcels  of  the  sub- 
merged lands;  and,  so  long  as  their  disposition  is  made 
for  such  purposes,  no  valid  objection  can  be  made  to 
the  grants.  It  is  grants  of  parcels  of  lands  under  navi- 
gable waters,  that  may  afford  foundation  for  wharves, 
piers,  docks  and  other  structures  in  aid  of  commerce, 
and  grants  of  parcels  which,  being  ocupied,  do  not  sub- 
stantially impair  the  public  interest  in  the  lands  and 
water  remaining  that  are  chiefly  considered  and  sustained 
in  the  adjudged  cases  as  a  valid  exercise  of  legislative 
power  consistently  with  the  trust  to  the  public  upon 
which  such  lands  are  held  by  the  State.  But  that  is  a 
very  different  doctrine  from  the  one  which  would  sanc- 
tion the  abdication  of  the  general  control  of  the  State 
over  lands  under  the  navigable  waters  of  an  entire  har- 
bor or  bay,  or  of  a  sea  or  lake.  Such  abdication  is  not 
consistent  with  the  exercise  of  that  trust  which  requires 


GO 

the  government  of  the  State  to  preserve  such  waters  for 
the  use  of  the  public.  The  trust  devolving  upon  the  State 
for  the  public,  and  which  can  only  be  discharged  by  the 
management  and  control  of  property  in  which  the  public 
has  an  interest,  cannot  be  relinquished  by  a  transfer  of 
the  property.  The  control  of  the  Stat<e  for  the  purposes 
of  the  trust  can  never  be  lost,  except  as  to  such  parcels 
as  are  used  in  promoting  the  interests  of  the  public 
therein,  or  can  be  disx)osed  of  without  any  substantial 
impairment  of  the  public  interest  in  the  lands  and  waters 
remaining.  It  is  only  by  observing  the  distinction  be- 
tween a  grant  of  such  parcels  for  the  improvement  of  the 
public  interest,  or  which  when  occupied  do  not  substan- 
tially impair  the  public  interest  in  the  lands  and  waters 
remaining,  and  a  grant  of  the  whole  property  in  which 
the  public  is  interested,  that  the  language  of  the  ad- 
judged cases  can  be  reconciled.  General  language  some- 
times found  in  opinions  of  the  courts,  expressive  of  abso- 
lute ownership  and  control  by  the  Stat-e  of  lands  under 
navigable  waters,  irrespective  of  any  trust  as  to  their 
use  and  disposition,  must  be  read  and  construed  with 
reference  to  the  special  facts  of  the  i)articular  cases.  A 
grant  of  all  the  lands  under  the  navigable  waters  of  a 
State  has  never  been  adjudged  to  be  within  the  legisla- 
tive power;  and  any  attempted  grant  of  the  kind  would 
be  held,  if  not  absolutely  void  on  its  face,  as  subject  to 
revocation.  The  State  can  no  more  abdicate  its  trust 
over  property  in  which  the  whole  x>^ople  are  interested, 
like  navigable  waters  and  soils  under  them,  so  as  to  leave 
them  entirely  under  the  use  and  control  of  private  par- 
ties, except  in  the  instance  of  parcels  mentioned  for  the 
improvement  of  the  navigation  and  use  of  the  \s-aters, 
or  when  parcels  can  be  disposed  of  without  impairment 
of  the  public  iijterest  in  what  remains,  than  it  can  abdi- 
cate its  police  powers  in  the  administration  of  govern- 


70 

ment  and  the  preservation  of  the  peace  In  the  adminis- 
tration of  government  the  use  of  such  powers  may  for  a 
limited  period  be  delegated  to  a  municipality  or  other 
•body,  but  there  always  remains  with  the  State  the  right 
to  revoke  those  powers  and  exercise  them  in  a  more  direct 
manner,  and  one  more  comformable  to  its  Welshes.  So 
with  trust  connected  with  public  proiyerty,  or  property 
of  a  special  character,  like  lands  under  navigable  waters, 
they  cannot  be  placed  entirely  beyond  the  direction  and 
control  of  the  State. 

"The  harbor  of  Chicago  is  of  immense  value  to  the  peo- 
ple of  the  State  of  Illinois  in  the  facilities  it  affords  to 
its  vast  and  constantly  increasing  commerce;  and  the 
idea  that  its  Legislature  can  deprive  the  State  of  control 
over  its  beds  and  waters  and  place  the  same  in  the  hands 
of  a  private  corporation  created  for  a  different  purpose, 
one  limited  to  transportation  of  passengers  and  freight 
between  distant  points  and  the  city,  is  a  proposition  that 
cannot  be  defended." 

The  King  of  England  is  the  owner  of  all  the  navigable 
waters  of  the  kingdom  and  of  the  soil  under  them,  but 
it  is  settled  law  that  since  Magna  Charta,  the  king 
holds  the  title  in  trust  for  the  public,  and  grants  by 
the  crown  in  derogation  of  the  public  right  of  navigation 
and  fishing  are  void.  {Martin  vs.  Waddell,  16  Pet.  367, 
410 ;  Blundale  vs.  Catterall,  5  Barn.  &  Aid.  287,  294,  304, 
309 ;  Duke  of  Somersett  vs.  Fogwell,  5  Barn  &  Cress  883, 
884.) 

And  the  court  of  Kings  Bench  in  Williams  vs.  Wilcox. 
8  Ad.  &  El,  314,  333-4,  held  that  such  was  the  law  before 
Magna  Charta. 

Attorney  General  vs.  Parmeter,  10  Price  378,  affirmed 
by  the  House  of  Lords,  10  Price  412,  concerned  the  val- 


71 

idity  of  a  grant  made  by  Chas.  I  in  1628  of  lands  between 
high  and  low  water  in  the  harbor  of  Portsmouth,  and  on 
which  the  defendants  were  constructing  a  dry  dock  and 
other  works  which  would  interfere  with  the  navigation 
of  the  harbor. 

On  a  bill  by  the  attorney  general  for  an  injunction  it 
was  held  that  where  a  part  of  the  sea  coast  or  shore, 
being  the  property  to  the  Crown,  and  giving  jiis  priva- 
tum to  the  king,  is  granted  to  a  subject  for  uses,  or  to 
be  enjoyed  so  as  to  be  detrimental  to  the  jus  publicum 
therein,  such  grant  is  void  as  to  such  parts  as  are  open 
to  such  objection,  if  acted  upon  so  as  to  effect  nuisance 
by  working  injury  to  the  public  right;  or  it  is  a  grant 
which  does  not  divest  the  crown  or  invest  the  grantee. 

Eldon,  Lord  Chancellor,  advising  the  house  of  lords, 
said: 

"It  is  my  judgment  that  on  the  circumstances  now  be- 
fore your  lordships  there  is  matter  suflSicient  to  put  in 
issue  on  this  record  the  question  of  the  validity  of  this 
grant — that  looking  to  these  letters  patent,  with  respect 
to  this  soil,  I  am  of  the  opinion  that  the  Court  of  Ex- 
chequer have  stated  a  proposition,  true  in  law,  that  the 
title  is  in  his  majesty." 

There  can  be  no  possible  doubt  about  the  proposition 
that  the  right  of  the  public  to  pass  and  repass  by  vessels 
or  vehicles  along  all  public  highways,  on  water  or  land,  is 
a  paramount  right,  and  all  private  or  local  rights  are 
subordinate  and  inferior. 

The  city  of  Detroit  has  no  more  right  to  stop  the  pas- 
sage of  street  cars  along  the  public  streets  of  the  city 
than  it  has  to  stop  the  passage  of  other  vehicles  or  of 
persons. 


72 

The  common  council  has  no  more  power  to  stop  the 
passage  of  street  cars  on  the  streets  of  the  city  than  it 
has  to  stop,  within  the  city  limits,  the  passage  of  craft 
on  the  Detroit  river. 

In  the  recent  case  of  Ainsworth  vs.  Munoshong  Hunt- 
ing and  Fishing  Club,  123  N.  W.  802,  the  Supreme  Court 
of  Michigan  said:  "It  is  the  establislied  law  of  this  state 
that  riparian  owners  along  the  Great  Lakes  own  only  to 
the  meander  line,  and  that  title  outside  this  meander 
line,  subject  to  the  rights  of  navigation,  is  held  in  trust 
by  the  state  for  the  use  of  its  citizens.  Among  these  is 
the  common  right  to  fisb  and  hunt." 


IV. 

Whatever  view  may  be  taken  of  the  original  con- 
tracts between  the  street  railway  company  and  the 
city,  it  is  certain  that  under  the  conditions  existing  in 
1909  and  1910,  the  city  has  no  power  at  the  expira- 
tion of  the  thirty  years  to  expell  the  street  railways 
from  the  streets  of  the  city. 

The  obligation  of  the  city  as  trustee  for  the  general 
public  to  keep  the  streets  in  good  condition,  and'  open 
and  free  for  travel  and  traffic  thereon,  is  a  continuing 
one,  and  the  duty  it  imposes  may  vary  from  time  to  time, 
that  is  to  say,  what  it  may  do  or  authorize  to  be  done 
at  one  time  it  may  not  do  or  authorize  to  be  done  at  an- 
other time. 

This  doctrine  was  declared  and  enforced  by  the  Sup- 
reme Court  of  the  United  States,  in  affirming  a  decision 
of  the  Supreme  Court  of  Illinois,  in  a  controversy  over 
a  street  railway  tunnel  under  the  South  Branch  of  the 
Chicago  river  at  or  near  Van  Buren  street  in  Chicago. 
(West  Chicago  R.  Co.  vs.  Chicago,  201  U.  8.  506;  S.  C. 
214  III.  9.) 

The  South  Branch  was  a  navigable  stream  in  Chicago. 
It  was  a  public  highway  for  the  passage  of  vessels  the 
same  as  a  street  is  a  public  highway  for  the  passage 
of  vehicles  and  persons.  The  street  railway  company 
by  permission  of  the  city  built  a  tunnel  under  the  river, 
with  a  depth  of  water  above  it  of  seventeen  feet,  which 
was  sufficient  for  any  craft  that  could  then  navigate  the 
river.     Some  ten   years   afterwards   Congress   made   an 


74 

appropriation  to  deepen  the  river  so  as  to  have  a  channel 
twenty-one  feet  deep,  but  provided  that  the  work  of 
removing  and  constructing  bridges  and  piers  and  lower- 
ing tunnels  should  be  done  or  caused  to  be  done  by  the 
city  of  Chicago  without  expense  to  the  United  States. 

The  common  council  passed  an  ordinance  directing  the 
street  railway  company  to  lower  its  tunnel  at  its  own 
expense  and  applied  for  a  mandamus  to  compel  the  com- 
pany to  do  so.  The  company  contended  that  the  order 
of  the  common  council  impaired  its  contract  with  the 
city,  and  that  as  the  tunnel  was  its  private  property  to 
take  it  without  compensation  would  deprive  the  company 
of  its  property  without  due  process  of  law. 

Held: 

(1)  That  in  a  navigable  stream  the  public  right  is 
paramount  and  the  city  was  under  a  continuing  duty 
of  protecting  the  free  navigation  of  the  river  and  its 
branches. 

(2)  That  the  city  could  not  be  exempted  from  its 
duty  by  an  agreement  it  may  have  made  with  the  rail- 
road company. 

(3)  That  the  railroad  company  built  the  tunnel  sub- 
ject to  the  duty  resting  on  the  city,  and  to  compel 
it  to  lower  the  tunnel  at  its  own  expense  was  not  a  vio- 
lation of  the  due  process  of  law  clause  of  the  constitution 
of  the  United  States. 

Applying  these  rulings  to  the  case  we  have  in  hand, 
it  is  plain,  that  the  right  of  the  general  public  to  rido 
in  street  cars  in  the  streets  of  Detroit  is  paramount  and 
superior  to  any  right  possessed  either  by  the  municipal- 
ity or  by  the  street  railway  company;  and  if  they  have 


76 

entered  into  any  contracts  express  or  implied,  whicli 
would  destroy  or  seriously  impair  the  street  railways, 
such  contracts  whether  originally  valid  or  not  must  give 
way  to  the  paramount  right. 

The  common  council  of  the  city  of  Detroit  has  no 
more  right  to  stop  the  operation  of  the  street  cars  on  the 
streets  of  the  city,  November  14,  1909,  than  it  has  to 
build  stone  walls  across  the  streets  and  to  stop  all  travel 
and  traffic  thereon. 

It  is  an  irrefragable  proposition  that  if  the  existing 
contract  between  the  city  of  Detroit  and  the  Detroit 
United  Railway  contained  an  express  covenant  on  the 
part  of  the  company  that  it  would  at  the  expiration  of 
the  thirty  years,  cease  to  operate  its  cars  and  remove 
the  tracks  from  the  streets,  or  if  it  is  held  that  there  is 
an  implied  covenant  to  make  such  a  surrender,  then 
such  covenant,  whether  express  or  implied,  must  be 
regarded  as  void  and  of  no  force  as  againsc  the  right  of 
the  general  public  to  have  the  street  railway  service 
continued  beyond  the  thirty  years,  without  any  serious 
interruption. 

The  Supreme  Courts  of  Ohio  and  Minnesota  have  each 
made  ^  practical  application  of  the  paramount  rlgnt  of 
the  general  public  as  affecting  the  obligations  of  interur- 
))an  street  railways. 

In  Townsend  vs.  City,  78  Ohio  122,  the  traction  com- 
pany obtained  permission  of  the  city  of  Circleville  to 
construct  and  operate  its  railroad  along  certain  streets, 
and  the  ordinance  granting  the  permission  stipulated 
"that  all  cars,  excepting  special  cars,  shall  stop  at  cross 
streets  and  at  street  intersections." 


76 

After  the  road  was  built  and  in  operation  the  citj 
passed  an  ordinance  making  it  a  penal  offense  for  any 
conductor  of  an  electric  interurban  or  street  car  to  fail 
or  refuse  t^  stop  the  car  at  any  street  intersection  when 
signaled  or  requested  so  to  do  by  any  person  desiring  to 
board  the  car  or  to  alight  therefrom. 

Without  determining  what,  if  any,  civil  remedies  the 
city  might  have  to  enforce  the  stipulation  contained  in 
the  ordinance  granting  permission,  the  court  held  that 
the  city  had,  under  the  laws  of  Ohio,  no  power  to  en- 
force it  by  penal  ordinance.  In  reaching  that  conclu- 
sion the  court,  at  page  134,  said: 

"If  every  city  and  village  through  which  such  a  rail- 
way passes  may  require  its  cars  to  be  stopped  at  every 
street  intersection  to  take  on  or  to  discharge  passengers, 
and  to  serve  the  purposes  of  a  street  railway,  then  its 
usefulness  as  a  means  of  interurban  transportation  may 
be  very  much  limited,  because  so  much  time  will  be  con- 
sumed in  passing  through  cities  and  villages  that  it 
will  no  longer  be  practicable  for  many  to  travel  in  that 
way.  Councils  may  reasonably  be  expected  to  be  actu- 
ated by  considerations  of  local  convenience  rather  than 
those  of  the  public  and  in  view  of  the  importance  of  the 
subject,  and  its  comparatively  recent  origin,  it  would 
seem  to  be  a  matter  for  consideration  by  the  legislature, 
and  it  is  in  view  of  these  considerations  that  we  reach 
the  conclusion  that  the  power  has  not  been  conferred  by 
the  general  terms  of  Section  28." 

In  Village  of  Excelsior  vs.  Minneapolis  &  St.  Paul  S. 
Ry.  Co.,  122  N.  W.  486,  the  village  sought  to  compel  the 
company  by  mandamus  to  obey  an  ordinance  requiring 
it  to  stop  all  cars  at  street  crossings  and  intersections. 
The  District  Court  of  Hannepin  County  granted  the  writ. 


77 

The  opiuion  of  the  Supreme  Court  state  the  facts,  and 
that  there  may  be  no  misunderstanding  as  to  what  was 
decided,  I  quote  it  in  full. 

"Jaggard,  J.  On  the  petition  of  the  village  of  Excel- 
sior, the  district  court  issued  a  writ  of  mandamus  to  the 
defendant  and  appellant  suburban  railway  company.  To 
an  answer  and  return  of  the  defendant  the  plaintiff  vil- 
lage demurred  on  the  ground  that  it  did  not  state  facts 
sufl&cient  to  constitute  a  defense.  The  demurrer  was 
sustained,  with  leave  to  defendant  to  amend.  This  ap- 
peal was  taken  from  the  order  to  that  effect. 

"It  appeared  that  defendant  was  authorized  by  ordin- 
ance to  operate  its  lines  within  the  limits  of  the  village 
under  provisions  which  included  the  following:  'See.  8. 
Said  Minneapolis  &  St.  Paul  Suburban  Eailway  Com- 
pany, its  successors  and  assigns,  shall  have  the  right  to 
charge  and  collect  five  cents,  and  no  more,  for  each  pas- 
senger traveling  on  any  of  said  lines  of  street  railway  or 
parts  thereof,  within  the  village  limits  of  the  village 
of  Excelsior;  provided,  however,  that  the  payment  of 
said  five  cents  shall  entitle  the  passenger  so  paying  the 
same  to  one  continuous  ride  from  any  point  in  the 
village  limits  in  the  village  of  Excelsior  located  along 
any  of  said  lines;  provided,  however,  that  no  fare  shall 
be  required  for  children  under  six  years  of  age  when 
traveling  with  or  attended  by  an  adult  having  paid  one 
full  fare.'  Subsequently  to  the  construction  of  defend- 
ant's lines,  tlie  village  passed  an  ordinance  which  is  as 
follows:  'Any  person,  company,  or  corporation  driving 
or  propelling,  or  requiring  to  be  driven  or  propelled, 
any  raiload  car  or  street  car  which  occupies  the  public 
streets,  avenues  or  alleys  of  the  village  of  Excelsior  for 
the  purpose  of  operating  upon  and  along  same,  shall 
stop  such   cars  at  any  and  all  of  the  intersections  or 


78 

crossings  of  streets  when  any  person  or  persons  require 
to  enter  or  alight  from  such  cars,  provided  such  cross- 
ings are  grade  crossings.'  It  was  sought  under  this  or- 
dinance to  compel  defendant  to  stop  its  cars  at  a  place 
where  its  line  in  plaintiff  village  was  intersected  by 
George  street.  In  point  of  fact  defendant  was  willing 
to  establish  a  stopping  place  three-fourths  of  a  mile  dis- 
tant, where  its  lines  divided,  and  one  line  passed  up 
Water  street.  Within  the  village  limits  west  of  this  stop- 
ping place  six  village  streets  intersected  defendant's 
tracks. 

"The  plaintiff  contends  that  the  ordinance  requiring 
defendant  to  stop  at  George  street  was  a  legitimate  ex- 
ercise of  police  power.  For  present  purposes  it  may  be 
conceded  that  the  village  council  had  the  authority  to 
pass  a  proper  ordinance  in  the  exercise  of  such  power. 
Such  an  ordinance  must  have  reference,  however,  to  pub- 
lic peace  and  safety  and  the  good  order  of  persons  or 
agencies  upon  the  streets.  Upon  the  assumption  that 
such  power  existed,  the  village  had  the  right  to  pass 
reasonable  ordinances  regulating,  inter  alia,  the  speed 
of  traffic  and  the  stoppage  of  cars.  Incidentally  such  or- 
dinances would  conduce  to  the  convenience  and  comfort 
of  the  community.  It  by  no  means  follows,  however,  that 
an  ordinance  designed  entirely  for  the  comfort  and  con- 
venience of  the  inhabitants  is  a  valid  exercise  of  the 
police  power.  The  ordinance  in  question  cannot  by  any 
reasonable  construction  be  regarded  as  the  result  of  the 
exercise  of  the  police  power.  Under  its  terms  cars  are 
allowed  to  operate  without  restriction,  except  Vhen  any 
person  or  persons  require  to  enter  or  alight  from  such 
cars.'  The  element  of  danger  to  users  of  the  highway 
is  effectually  ignored.  The  right  to  mandamus  based 
upon  the  police  power  must  therefore  be  eliminated. 


79 

"The  question  then  arises  whether  the  terms  of  the 
ordinance  applied  to  the  facts  in  this  particular  case. 
The  defendant  urges  that  their  fair  construction  com- 
pels the  conclusion  that  they  do  not  apply.  They  refer 
expressly  to  lines  of  the  defendant  which  occupy  and 
which  are  located  upon  any  public  street.  At  the  place 
in  question  defendant  did  not  occupy  a  street — had  not 
constructed  its  lines  along  the  street,  but  on  its  owm 
right  of  way.  On  Water  street  it  had  constructed  its 
lines  along  the  street.  The  mandamus,  however,  did 
not  purport  to  affect  Water  street.  It  is  true  that  de- 
fendant's lines  crossed  streets  and  alleys;  but  that  fact 
did  not  bring  defendant  within  the  provisions  of  the  or- 
dinance, for  it  was  held  in  Railway  Co.  vs.  Manitou 
Forest  Syn.,  101  Minn.  132,  112  N.  W.  13,  that  'the 
crossing  of  streets  and  alleys,  incidental  to  constructing 
a  railroad  from  place  to  place,  does  not  constitute  the 
occupancy  of  such  streets  or  alleys  for  the  purpose  of 
operating  a  railway  thereon,  within  the  provision  of  this 
Section  2841,  Rev.  Laws  1905,  and  a  railroad  company 
has  the  right  to  acquire  the  right  by  condemnation,  un- 
der Section  2916,  Rev.  Law'S  1905,  a  right  of  way  over 
the  streets  and  alleys  of  cities  and  villages  and  over  pri- 
vate property  within  such  limits,  without  securing  a 
franchise  from  the  municipal  authorities.'  There  is  ob- 
vious cogency  in  this  argument ;  but  in  view  ^f  the  great 
importance  of  the  public  qti^stion  involved  we  feel  un- 
willing to  rest  the  decision  on  this  ground  alone,  or  to 
abstain  from  the  determination  of  the  larger  questions 
involved. 

"We  are  of  opinion  that  the  contract  with  the  village 
under  which  defendant  operated  its  lines  did  not  author- 
ize the  ordinance.  It  is  obvious  that  section  8  must  be 
reasonably  construed.  It  is  clear  that  the  provisions, 
literallv  construed,  would  be  void.     An  ordinance   mav 


80 

require  under  given  conditions  that  a  street  car  must 
stop  at  the  end  of  any  block,  or  at  the  middle  of  long 
blocks,  or  at  railroad  crossings,  or  at  places  where  fire 
engines  may  suddenly  emerge.  But  a  requirement  that 
a  car  must  stop  at  every  point  at  which  a  passenger  may 
wish  to  enter  or  alight  would  be  destructive,  not  only  of 
the  purposes  for  which  the  corporation  was  authorized  to 
transact  business,  but  would  also  completely  demoralize 
traffic,  and  would  be,  the  authorities  generally  agree  with- 
out legal  force.  It  is  equally  clear  that  a  proper  construc- 
tion of  the  charter  provisions  must  have  reference  to  the 
situation  as  a  whole,  and  be  determined  with  due  regard 
to  all  relevant  circumstances.  The  subject  is  not  to  be 
regarded  from  a  narrow  or  local  point  of  view.  The 
reasonableness  of  an  ordinance,  it  is  elementary,  is  a 
question  of  public  policy.  Public  policy  necessarily  in- 
volves a  consideration  of  a  number  of  important  facts 
appearing  on  this  record. 

"One  of  these  considerations  is  that  the  respondent 
company  has  a  somewhat  anomalous  legal  status.  Under 
the  charter  provisions  wbich  have  been  herein  quoted,  it 
would  appear  to  be  a  street  railroad.  In  Railroad  Go. 
vs.  Manitou  Forest  8ijn.,  101  Minn.,  132,  112  N.  W.,  13 
(supra),  however,  it  was  held  that  defendant  was  not  a 
mere  street  railroad  company,  but  was  organized  to  con- 
struct and  operate  interurban  railroads  from  place  to 
place,  and  as  such  bad  the  right  to  exercise  the  power  of 
eminent  domain.  A  construction  which  would  give  to 
special  legislation  hy  a  village  or  city  an  effect  which 
would  render  nugatory  rights  exercisable  under  general 
loAJOS  would  he  subject  to  ohvio'us  a/nd  substantial  objec- 
tions. 

"Another  consideration  is  that  the  principal  business 
of  the  respondent  is  to  furnish  rapid  transportation  of 
passengers  between  various  points  around  Lake  Minne- 


81 

tonka  and  the  people  of  cities  to  the  east  and  of  the  sur- 
rounding district  to  the  west.  In  this  business  respon- 
dent had  the  competition  of  two  steam  railroads.  If  the 
principle  for  which  the  village  contends  would  be  adopted, 
respondents  might  be  compelled  to  stop  at  so  many  street 
crossings  as  to  seriously  hamper,  and  possibly  to  destroy, 
its  competitive  power.  It  is  clearly  opposed  to  public 
policy  to  secure  to  steam  railroads  monopoly  of  local  pas- 
senger traffic.  As  Stimmers,  J.,  said  in  Toicnnend  r.v.  Cir- 
cleville,  78  Ohio,  122,  134,  84  ^.  E.  792,  16  L.  K.  A.,  {N. 
S.),  914:  'If  every  city  and  village  througli  which  such  a 
railway  (as  the  one  at  bar)  passes  may  require  its  cars 
tx)  be  stopped  at  every  street  intersection  to  take  on  or  to 
discharge  passengers,  and  to  serve  the  purposes  of  a  street 
railway,  then  its  usefulness  as  a  means  of  int^nirban 
transportation  may  be  verj-  much  limited,  because  so  much 
time  will  be  consumed'  in  passing  through  cities  and  vil- 
lages that  it  will  be  no  longer  practicable  for  many  to 
travel  in  that  way.' 

"A  final  consideration  is  that  the  ordinance  does  sub- 
seiTe  the  public  convenience  in  the  village.  The  distance 
between  the  place  at  which  the  cars  are  sought  to  be 
stopped,  Greorge  street,  and  the  place  at  which  defendant 
o£fers  to  stop  the  cars,  at  Water  street,  is  in  considerable. 
The  population  between  the  two  points  is  sparse.  How 
many  people  would  use  a  stopping  point  is  conjectural; 
but  it  is  plain  that  the  number  would  be  very  small.  The 
inconvenience  resulting  to  the  altogether  larger  number 
of  persons  carried  to  more  distant  points  icould  ineiita- 
My  tend  to  decrease  the  extent  of  train  service.  The  even- 
tual diminution  in  the  number  and  speed  of  coats,  especial- 
ly if  the  principle  invoked  was  applied  to  a  great  extent, 
would  appear  to  more  than  equal  any  possible  advantage. 
The  weight  to  be  given  to  this  custom  is  undoubtedly 
diminished  by  the  fact  that  this  matter  rests  largely  in 
the  discretion  of  the  village  council. 


82 

"After  examination  of  the  question  as  a  whole,  we  have 
concluded  that  the  proper  course  is  to  reverse  the  de- 
cision of  the  trial  court. 

Eeversed." 

Neither  the  supreme  court  of  Ohio  or  that  of  Minnesota 
announced  the  doctrine  of  the  paramount  right  of  the 
general  public,  hut  thej  did  that  which  makes  their  de- 
cisions in  these  interurban  cases  much  better  precedents 
than  any  mere  statement  of  the  rule  could  possibly  be,  for 
thej  each  based  the  judgment  of  the  court  on  the  rights 
of  the  general  public,  and  made  the  local  rights  and  regu- 
lations give  way  to  the  more  important  and  superior 
rights.  In  short,  they  enforced  the  rights  of  the  general 
public  as  superior  and  paramount. 

It  would  be  difficult  to  cite  more  authoritative  decisions 
if  we  are  to  pay  any  attention  to  the  distinctions  between 
actual  decisions  and  obiter  dicta,  or  statments  of  rules  of 
law,  having  only  a  remote  bearing  on  the  cases  actually 
decided. 

The  Michigan  supreme  court,  in  a  case  recently  decided, 
was  evidently  actuated  by  the  same  considerations  as  those 
which  influenced  the  supreme  courts  of  Ohio  and  Minne 
sota.  The  City  of  Kalamazoo  claiming  that  the  street 
railway  company  occupying  the  streets  of  the  city  had  no 
right  to  operate  interurban  cars  thereon,  applied  to  the 
circuit  court  of  the  county  and  obtained  an  injunction 
restraining  the  company  from  operating  such  cars.  As 
the  interurban  cars  served  the  people  of  the  city  as  well 
as  outsiders,  it  is  difficult  to  understand  on  what  legal 
ground  such  relief  could  be  prayed,  but  the  circuit  judge 
granted  the  injunction. 

The  supreme  court  issued  a  mandamus  vacating  the 
order  for  an  injunction,  on  the  ground  that  it  did  not 


83 

appear  that  the  citizens  of  Kalamazoo  would  suffer  any 
injury  if  the  operation  of  the  cars  was  continued  until  the 
final  termination  of  the  case,  and  an  injunction  pendente 
lite  was  not  proper.  The  court  refused  to  determine  the 
merits  of  the  controversy,  although  it  might  have  done  so 
as  there  was  no  dispute  about  the  facts,  and  the  bill  of 
complaint  of  the  city  was  devoid  of  equity,  if  regard 
is  had  for  the  right  of  the  general  public  to  have  the  inter-- 
ur'ban  service  continued  in  spite  of  the  litigious  idiosyn- 
cracies  and  demands  of  the  common  council  of  the  City 
of  Kalamazoo.  (Michigan  United  Railways  vs.  Kalamaxsoo 
Circuit  Judge,  123  N.  W.,  1100.) 

When  a  street  railway  company  and  a  municipality 
enter  into  a  contract,  fixing  the  terms  and  conditions  on 
which  the  company  will  be  permitted  to  construct  and 
operate  street  railways,  it  must  necessarily  be  understood 
that  the  contract  is  subject  to  the  paramount  rights  of  the 
general  public,  which  is  the  third  party  to  he  contract, 
and  is  represented  by  the  legislature  of  the  state  as  its 
trustee.  The  obligation  resting  upon  all  the  parties,  at 
the  expiration  of  any  term  that  may  have  been  agreed 
upon,  is  that  the  company,  will  do  and  the  municipality 
and  the  state  will  permit  to  be  done,  whatever  the  needs 
and  exigencies  of  the  general  public  may  require. 

As  I  have  shown  by  the  lake  front  cases  in  'Chicago,  the 
state  itself,  as  trustee  for  the  general  public,  has  no  more 
power  to  ignore  or  violate  the  trust  reposed  in  it,  than 
has  a  municipality  or  any  other  trustee.  Streets  and  nav- 
igable waters  are  constructed  or  improved,  and  exist,  for 
the  use  of  the  public,  which  is  the  beneficiary  of  the  trust 
and  the  real  owner. 


84 


V. 

Retrospectively  and  prospectively  considered  the 
Michigan  constitution  of  1908  strengthens  the  prop- 
osition that  street  grants  for  public  utilities  of  a  per- 
manent nature  necessarily  contemplate  that  the  pub- 
lic service  is  to  continue  beyond  the  period  of  limita- 
tion fixed  by  the  local  authorities. 

By  far  the  most  important  and  far-reacliing  change, 
made  by  the  new  constitution  in  the  constitutional  and 
statutory  law  of  this  state,  relates  to  the  use  of  the  puhlic 
streets  and  highways  by  public  utility  corporations.  Un- 
der the  constitution  of  1850  and  the  laws  passed  there- 
under, the  consent  of  the  local  authorities  to  the  occu- 
pancy of  the  streets,  by  a  street  railway  or  gas  company, 
or  other  public  utility  corporation,  was  not  a  franchise, 
but  a  mere  contract  between  the  municipality  and  the 
company.  The  franchises  of  the  company  came  from  the 
state  in  virtue  of  the  incorporation  of  the  company  under 
a  general  law  permitting  corporate  organization. 

These  franchises  consisted  of  the  privilege  of  being  a 
corporation,  and  the  right  to  conduct  the  business  of  own- 
ing and  operating  street  railways,  gas  works  and  mains, 
or  the  like,  and  the  consent  of  the  local  authorities  to  the 
use  of  the  streets,  was  a  mere  contract,  expressed  in  an 
ordinance,  and  accepted  by  the  company,  as  the  grantee 
therein.  This  has  been  the  settled  law  of  this  state  for 
many  years  and  l>ecause  it  was  the  law,  it  was  perfectly 
competent  for  the  contract  to  extend  beyond  the  corporate 
life  of  the  company  receiving  the  grant.  The  contract 
was  a  right  of  property  which  survived  the  dissolution 
and  death  of  the  company. 


8.") 

For  years  it  has  not  been  legally  correct  to  speak  of 
these  local  consents  as  franchises;  but  a  radical  change 
has  been  made  bj  the  constitution  of  1908.  It  authorizes 
cities,  villages  and  townships  to  grant  franchises  to  use 
the  streets  and  t.o  do  a  local  business  therein,  but  no 
"municipality"  can  grant  such  a  franchise  for  a  longer 
X>eriod  than  thirty  years.  A  security  franchise  as  the 
basis  of  municipal  ownership  bonds  can  only  be  granted 
for  twenty  years.  Strictly  speaking,  townships  are  not 
municipal  corporations  but  the  word  "municipality"  as 
used  in  the  new  constitution  includes  to\>Tiships,  for  it  is 
not  reasonable  to  believe  that  it  was  intended  to  limit 
grants  by  cities  and  villages  to  tbirty  years,  and  to  permit 
townships  to  make  perpetual  grants.  It  is,  however,  ex- 
pressly provided  that  cities  and  villages  can  not  grant 
a  public  utility  franchise,  that  is  not  revocable,  without 
the  approval  of  three-fifths  of  the  electors  voting  thereon ; 
and  that  in  townships  a  majority  vote  is  sufficient. 

Anotber  provision  prohibits  public  utility  corporations 
from  using  the  streets  of  any  city,  village  or  township 
without  the  consent  of  the  city,  village  or  township,  and 
from  transacting  any  local  business  therein  without  first 
obtaining  a  franchise  therefor  from  such  city,  village  or 
township. 

Thus  it  appears  that  the  people  of  the  state  in  their 
new  constitution  have  authorized  townships,  villages  and 
cities  to  grant  irrevocable  local  franchises  for  thirty  years. 
Corporate  franchises  granted  by  the  state  are  subject  to 
the  power  reserved  to  the  legislature  of  amendment,  alter- 
ation or  repeal,  but  no  such  reservation  is  made  in  behalf 
of  townships,  villages  or  cities.  On  the  contrary  it  is  ex- 
pressly provided  that  irrevocable  grants  may  be  made  by 
them. 


86 

Here  we  have  two  conflicting  matters  of  fact:  (1)  A 
grant  or  franchise  to  use  the  streets  is  more  difficult  to 
obtain,  because  it  must  be  approved  by  the  electors  in  an 
election;  (2)  But  a  franchise  that  has  been  so  approved 
is  sacred  and  inviolable,  and  wholly  beyond  the  reach  of 
any  power  in  the  state. 

What  effect  can  tJbis  change  in  the  legal  situation  have 
upon  the  rates  the  public  must  pay  for  riding  on  the 
street  railways,  or  for  a  thousand  feet  of  gas? 

Under  the  constitution  of  1850  and  the  laws  passed 
in  pursuance  thereof,  it  was  not  contemplated  that  street 
railways  or  gas  works  and  mains,  should  cease  to  exist 
when  the  corporation,  owning  and  operating  them  ex- 
pired, or  the  local  contracts  under  which  they  were  per- 
mitted to  occupy  the  streets  came  to  an  end.  On  the  con- 
trary it  was  contemplated  and  expected  by  all  the  parties 
to  these  grants  and  contracts,  that  the  public  service 
should  go  on  forever.  It  was  not  contemplated  that  when 
the  service  these  utility  corporations  perform  should  be- 
come thousands  of  times  more  important  and  desirable 
for  the  people,  they  should  cease  to  exist  and  their  plants 
and  conveniences  go  out  of  business.  While  the  fran- 
chises of  the  corporation  might  expire,  and  the  lotal  con- 
tracts might  come  to  an  end  by  their  o\sti  limitation  in 
point  of  time,  yet,  it  was  implied  and  understood  that 
the  street  railways  and  gas  works  should  continue  in  oper- 
ation as  long  as  the  people  need  transportation  and  light, 
that  is,  as  long  as  the  people  shall  go  and  come,  and  night 
follows  the  day. 

Can  this  be  said  of  grants  to  be  made  under  the  situa- 
tion of  1908?  Does  not  that  instrument  in  the  time  limi- 
tations placed  upon  grants  of  franchises  by  townships, 
villages  and  cities  mean  that  such  franchises  shall  wholly 


87 

cease  to  exist  at  the  expiration  of  the  twenty  or  thirty 
years  for  which  they  may  be  granted? 

Prior  to  the  taking  effect  of  the  new  constitution,  Jan- 
uary 1,  1909,  there  was  no  constitutional  or  statutory  pro- 
vision placing  a  time  limit  on  local  grants  to  public  serv- 
ice corporations.  In  Ohio  they  have  a  stautory  limit  of 
twenty-five  years,  but  in  Michigan  there  has  been  nothing 
of  the  kind  prior  to  the  new  constitution.  The  local  con- 
sents have  been  in  some  cases  expressly  made  perpetual, 
in  other  cases  they  were  made  without  any  limit  and  were 
therefore  perpetual,  and  in  other  instances  a  limit  of 
twenty  or  thirty  years  or  other  period  of  time  was  fixed 
by  the  agreement  of  the  parties,  accompanied  with  such 
implied  obligations  as  were  inferable  from  its  express 
terms,  the  subject  matter,  and  the  relation  of  the  parties 
toward  each  other  and  the  general  public. 

It  would  be  difficult  to  foretell  what  the  supreme  court 
of  the  state  of  thirty  or  forty  years  hence  will  take  of 
a  municipal  franchise  granted  under  the  new  constitu- 
tion, but  we  can  now  form  an  intelligent  and  trustworthy 
opinion  of  the  intention  of  the  constitutional  convention 
and  of  the  people,  in  adopting  and  approving  time  limita- 
tions on  all  local  franchises  granted  by  cities,  townships 
and  villages. 

For  some  fifteen  or  sixteen  years  preceding  the  conven- 
tion, a  street  railway  controversy  had  been  going  on  in 
the  city  of  Detroit,  and  the  corporation  counsel  of  the 
city  and  some  other  delegates  were  sent  to  the  convention 
with  special  reference  to  that  controversy,  which  became 
one  of  the  leading  subjects  of  discussion  in  the  delibera- 
tions of  the  convention. 

The  constitution  makers  could  have  expressed  their 
views  in  two  different  ways.  They  could  have  recognized 
the  permanent  nature  of  investments  in  public  utilities, 


8S 

and  at  the  same  time  protected  the  public  by  a  simple  pro- 
vision that  all  public  service  corporations  should  serve 
the  public  efficiently  and  that  in  the  absence  of  a  local 
contract  or  franchise  fixing  rates  and  fares  reasonable 
compensation  only  for  the  service  rendered  should  be 
charged  by  them,  or  they  could  insert  provisions  in  the 
constitution  fixing  time  limitations  on  local  grants.  They 
chose  the  latter  course,  but  it  does  not  follow  that  they 
did  this  with  the  view  of  putting  all  investments  in  pub- 
lic utilities,  at  the  mercy  and  caprice  of  the  localities, 
whenever  a  local  franchise  expires.  That  such  was  the 
scheme  of  some  members  of  the  convention  is  beyond  ques- 
tion, but  it  is  very  doubtful  whether  the  convention  as  a 
whole  so  understood  the  provisions,  and  it  is  certain  that 
the  people  had  no  such  view  when  they  adopted  the  con- 
stitution. 

It  is  hardly  within  the  limits  of  legitimate  argument  to 
contend  or  assume  that  the  people  intended  to  confer  any 
such  a;bsolute  arbitrary  and  confiscatory  power  upon 
townships,  villages  and  cities.  The  constitutional  conven- 
tion and  the  people  must  have  known  that  it  would  be  im- 
possible to  enlist  capital  in  a  public  utility,  if  the  entire 
investment  must  be  earned  in  net  profits  over  and  above 
operating  expenses  and  interest  in  thirty  years,  which  will 
be  the  case,  if  the  plant  of  the  public  utility  is  to  have  no 
value  at  the  end  of  tha!t  period,  except  what  it  may  be 
worth  as  junk. 

On  the  other  hand  they  must  have  realized  that  a  secur- 
ity franchise  collateral  to  the  property  of  a  public  utility 
would  be  of  little  value,  if  at  the  end  of  twenty  years  the 
municipality  had  the  power  to  almost  completely  destroy 
the  value  of  the  physical  property. 

Is  it  reasonable  to  believe  that  street  railway  ibonds, 
whether  issued  by  a  city,  or  by  a  private  corporation,  with 


89 

no  other  security  than  a  twenty  or  thirty-year  franchise, 
can  be  sold  in  any  money  market  in  the  world,  unless  the 
rates  or  fares  have  been  fixed  high  enough  to  allow  the 
whole  investment  to  be  realized  as  profits  within  the  life 
of  the  franchise? 

It  may  be  urged  that  private  capital  will  be  willing  to 
run  the  risk  of  getting  a  new  franchise  at  the  expiration 
of  an  old  one,  but  what  rates  of  interest  and  compensa- 
tion will  it  charge  for  running  such  a  risk? 

If  the  city  of  Detriot  should  seek  to  acquire  by  pur- 
chase or  condemnation  the  street  railways  within,  or  part- 
ly within  and  partly  without  the  city,  how  is  it  going  to 
get  the  money  to  pay  for  the  property,  with  no  other  ulti- 
mate security,  than  a  twenty-year  franchise  and  the  tan- 
gible property  as  junk? 

And  if  the  Detriot  United  Kailway  surrenders  its  pres- 
ent franchises  and  accepts  a  new  one  under  the  constitu- 
tion of  1908,  how  is  it  going  to  borrow  any  money  to  make 
the  extensions  and  betterments  the  increase  in  the  popu- 
lation and  business  of  the  city  has  made  necessary,  with 
no  security  but  a  franchise  which  expires  absolutely  in 
thirty  years? 

These  are  important  questions,  as  it  is  very  plain  that 
the  nerw'  constitution  is  a  barrier  to  low  rates  of  fare 
unless  some  scheme  can  be  devised  by  which  the  perma- 
nent investment  in  a  public  utility  can  be  saved  from  de- 
struction at  the  mere  unrestrained  will  of  the  locality 
when  a  municipal  franchise  expires. 

The  only  possible  way  of  avoiding  this  dilemma  is  to 
adopt  the  very  doctrine  for  which  I  contend.,  viz:  That 
the  constitutional  and  statutory  provisions  limiting  the 
life  of  local  franchises  to  twenty  and  thirty  years,  were 
not  intended  to  be  absolute  limitations,  but  that  all  local 
franchises  carry  with  the  grant  an  implied  covenant  on 


90 

the  part  of  the  grantee  that  at  the  expiration  of  the  period 
agreed  upon,  it  or  its  successors  and  assigns  will  continue 
the  public  service,  and  an  implied  covenant  on  the  part 
of  the  municipality  that  it  will  not  do  anything  to  pre- 
vent the  company  from  so  doing. 

The  public  will  be  protected  because  the  company  as  a 
public  utility  corporation  will  be  legally  bound  to  per- 
form the  service  it  renders  the  public  for  reasonable  com- 
pensation, and  it  can  be  assumed  that  in  the  absence  of 
a  local  contract,  or  franchise,  fixing  the  rates  of  compen- 
sation, the  state  will  interpose  its  authority. 

It  has  already  done  so,  as  far  as  street  railway  com- 
panies, whose  business  is  not  wholly  within  the  corporate 
limits  of  a  single  municipality,  as  it  has  conferred  author- 
ity on  the  Michigan  State  Railroad  Commission  to  fix,  in 
the  absence  of  local  agreements,  rates  of  fare  for  street 
railway  companies,  not  "engaged  solely  in  the  transpor- 
tation of  passengers  within  the  limits  of  cities  or  within 
a  distance  of  five  miles  of  the  boundaries  thereof."  {Pub- 
lic Acts,  1909,  p.  708.) 

Some  persons  have  assumed  that  the  city  of  Detroit 
can  borrow  money  to  pay  for  the  street  railways,  on  a 
security  franchise  for  twenty  years,  because  the  Detroit 
United  Railway  was  able  to  borrow  millions  of  money  on 
local  grants  expiring  in  fifteen  or  twenty  years,  but  the 
local  grants  under  which  the  Detroit  United  Railway 
owns  and  operates  street  railways  in  the  city  of  Detroit, 
were  made  under  the  constitution  and  laws  in  force  prior 
to  the  adoption  of  the  constitution  of  1908,  and  neither 
the  company  or  the  bond  holders  or  the  city  expected 
that  a  renewal  of  the  grants  on  reasonable  terms  could 
not  be  obtained.  The  grants  carried  witb  them  the  neces- 
sary implication  that  if  the  terms  for  a  renewal  could 
not  be  agreed  upon,  the  company  was  to  go  on  with  the 


91 

operation  of  its  lines,  after  the  time  limits  expired,  but 
subject  to  its  obligation  as  a  common  carrier  to  charge 
reasonable  fares.  This  implication  was  necessary  and 
legitimate,  in  order  to  preserve  the  rights  of  the  public, 
and  to  prevent  the  city  from  having  and  exercising  the 
power  to  confiscate  or  destroy  a  very  valuable  property 
devoted  to  the  public  use. 

And  a  like  implication  in  the  case  of  local  franchises 
granted  under  the  constitution  of  1908,  is  equally  neces- 
sary and  legitimate  in  ortier  to  prevent  that  constitution 
from  becoming  a  delusion  and  a  snare,  and  from  being 
properly  characterized  as  the  most  arbitrary,  unjust  and 
imi)olitic,  constitution  ever  adopted  in  the  United  States, 

Having  considered  these  provisions  of  the  new  consti- 
tution from  a  radical  point  of  view,  I  now  pass  to  their 
consideration  from  a  more  conservative  and  much  better 
standpoint.  In  my  judgment  these  new  constitutional 
limitations  do  not  accomplish  as  much  as  is  claimed  for 
them. 

One  thing  they  certainly  do.  They  put  an  end  to  what- 
ever power  the  legislature  had  under  the  constitution  of 
1850,  to  grant  the  use  of  the  streets  to  public  service  cor- 
porations without  the  consent  of  the  local  authorities. 
But  could  the  legislature  itself  under  the  constitution  of 
1850,  grant  the  use  of  the  streets  to  street  railway  cor- 
porations? I  have  had  occasion  to  make  a  strong  con- 
tention to  the  contrary,  based  upon  the  provisions  of  the 
constitution  of  1850  localizing  the  public  highways  of 
the  state. 

In  the  first  place  the  state  being  prohibited  from  engag- 
ing in  any  work  of  internal  improvement  could  not  itself 
improve  the  highways.  The  legislature  was  prohibited 
from  vacating  or  altering  any  road  laid  out  by  commis- 
sioners of  highways  or  any  street  in  any  city  or  village 


92 

or  in  any  recorded  town  plat.  The  commissioners  of  high- 
ways were  township  oflScers,  designated  by  the  constitu- 
tion, who  could  not  be  wholly  deprived  of  their  powers; 
and  the  boards  of  supervisors  of  counties,  were  given 
power  to  provide  for  laying  out  highways  and  the  con- 
struction of  bridges. 

Under  these  restrictions  on  the  legislative,  the  town- 
ships, cities  and  villages  of  the  state  could  not  be  de- 
prived of  a  reasonable  control  of  their  highways  and 
streets,  and  the  new  con^itution  in  reserving  to  them 
such  reasonable  control,  simply  gives  expression  to  and 
affirms  that  doctrine.  (Art.  VIII,  Sec.  28.) 

It  is  true,  the  supreme  court  sustained  the  power  of 
the  legislature  under  the  constitution  of  1850  to  grant  the 
use  of  the  streets  to  telephone  and  telegraph  companies 
without  the  consent  of  the  local  authorities,  but  such  com- 
panies make  very  little  use  of  the  streets,  and  their  poles 
and  wires  are  not  an  improvement  of  the  streets  for  high- 
way purposes,  like  the  tracks  of  a  street  railway  company. 
A  distinction  might  have  been  made  between  street  rail- 
ways, and  other  uses  of  the  street,  not  facilitating  public 
travel  thereon,  but  the  question  never  arose  and  was  of 
no  practical  importance  because  in  the  case  of  street  rail- 
ways the  legislaiture  did  always  require  the  local  assent. 

The  new  constitution  is  not  as  revolutionary  in  this  re- 
spect as  one  might  a,t  the  first  blush  believe  it  to  be. 

Whether  the  provision  requiring  a  local  franchise  is 
more  revolutionary  depends  upon  what  may  be  covered 
by  a  city,  village  or  township  in  making  a  local  grant. 
The  legislature  retains  its  power  to  provide  by  general 
laws  for  the  incorporation  of  street  railway  companies 
and  other  corporations,  including  its  right  to  amend, 
alter  or  repeal  such  laws. 


J)3 

Can  the  local  authorities  in  granting  a  local  franchise 
abridge  the  power  of  the  legislature  to  amend,  alter  or 
repeal;  and  if  a  local  franchise  fixed  rates  of  fare  or 
charges,  or  imposed  regulations  concerning,  say,  the  pav- 
ing of  tJie  streets,  could  not  the  legislature  change  the 
rates  of  fare  or  charges,  or  the  paving  regulations,  not- 
withstanding the  terms  of  the  local  franchise? 

My  opinion  is  that  the  legislature  could  do  so.  (In- 
dianapolis vs.  Navin,  151  Ind.,  139;  StanisloAis  Co.  vs. 
San  Joaquin  Etc.  Co.,  192  U.  S.,  201 ;  Fair  Haven  R.  R- 
Co.  vs.  New  Havm,  203  U.  S.,  379.) 

It  must  be  remembered  that  the  power  to  amend,  alter 
and  repeal  was  reserved'  in  constitutions  and  statutes,  on 
the  suggestion  of  Justice  Story  in  the  Dartmouth  Col- 
lege case,  to  prevent  the  charters  of  corporations  froitt 
becoming  inviolable  contracts,  and  this  object  would  be 
defeated,  if  municipalities  in  making  street  grants  could 
put  them  beyond  the  reach  of  the  power  of  the  l^islatnre 
to  amend,  alter  or  repeal. 

That  power  must  be  exercised  subject  to  the  rights  of 
property  guaranteed  by  the  state  and  federal  constitu- 
tions, but  wdth  the  restrictions  thus  imposed,  the  legis- 
lature retains  full  power. 

Local  street  grants,  contracts  and  franchises,  are  neces- 
sarily subject  to  the  power  of  Iegislat.ure,  and  while  these 
must  be  regarded  as  inviolable  contracts  as  far  as  action 
by  the  municipalities  is  concerned,  it  cannot  be  truth- 
fully said,  that  the  l^islature  is  equally  without  power  to 
change  the  terms  and  conditions  of  such  contracts. 

In  Taylor  vs.  Street  Railwai/  Co.,  80  Mich.,  77,  the 
supreme  court  of  this  state  sustained  the  power  of  the 
legislature  to  modify  the  local  contract. 


94 

Justice  Grant,  for  the  court,  said: 

"The  power  to  grant  immunity  to  such  corporations 
from  legislative  regulation  and  control  is  an  important 
one.  A  village  of  a  few  hundred  inhabitants  may  in 
much  less  than  thirty  years  grow  to  a  city  of  many  thou- 
sands. Bay  City  well  illustrates  this  fact.  WTiat  in  the 
one  w'ould  cause  no  damage  might  in  the  other  cause 
great  damage.  The  village  council  cannot  well  provide 
regulations  and  ordinances  applicable  to  a  large  city. 
It  is,  therefore,  highly  important  that  the  legislature 
should  retain  the  power  to  pass  enactments  for  the  con- 
trol of  these  quasi  public  corporations  suitable  to  the 
changed  state  of  a  fairs/' 

In  the  Indianapolis  Street  Railway  case  of  Citizens 
Street  R.  Co.  vs.  City  Ry.  Co.,  64  Fed.,  647,  the  local 
grant  was  for  thirty-seven  years,  and  the  court  held  that 
limitation  was  invalid,  and  the  franchise  perpetual,  but 
subject  to  the  power  of  the  legislature. 

Woods,  Circuit  Judge,  said: 

"Subject  to  the  reserved  power  of  the  legislature  to 
amend  or  repeal  the  act,  perpetual  corporate  existence 
was  given  in  explicit  terms ;  and,  in  the  absence  of  express 

or  implied  limitation  thereon,  the  necessary  presumption 
is  that  the  franchise  granted  was  intended  to  be  of  like 
duration,  subject  only  to  legislative  revocation.  It  is  not 
to  be  supposed  that  the  legislature  intended  that  there 
should  be  corporate  existence  without  a  franchise — the 
only  reason  for  such  existence.  It  is  not  a  question  of 
perpetuity  or  of  irrevocable  right.  If  it  were,  different 
rules  of  construction  would  prevail.  No  presumption  or 
inference  could  be  allowed  in  favor  of  a  perpetual  right, 
and  every  reasonable  intendment  against  it  should  be  in- 
dulged.   But  danger  in  that  direction  lurks  rather  in  the 


95 

supposed  power  of  the  common  council.  If  it  had  author- 
ity to  agree  to  a  franchise  for  thirty  years,  it  might,  with 
equal  conclusiveness,  have  stipulated  for  one  of  sixty  or 
ninety  years,  or  any  longer  term,  imposing  ux)on  the  city, 
it  might  be  for  generations,  the  evils  of  a  monopolistic 
perpetuity.  Thirty  years  are  too  many  for  a  burdensome 
or  unjust  grant.  As  wasi  said  in  Taylor  vs.  Railway  Co., 
80  Mich.,  77,  45  N.  W.,  335,  it  is  highly  important  that 
the  legislature  should  retain  the  power  to  pass  enact- 
ments for  the  control  of  these  quasi  public  corporations 
suitable  to  changed  conditions  of  affairs.  The  village  or 
small  city  cannot  well  provide  regulations  and  ordinances 
applicable  to  a  large  city. 

"If  agreements  by  common  councils  like  the  one  in 
question  are  authorized  and  binding,  they  must,  when 
made,  operate  to  suspend,  pro  tanto,  the  reserved  power 
of  the  legislature,  by  repealing  the  act,  to  terminate  the 
life  of  companies  organized  under  it.  They  are  incon- 
sistent with  that  power.  On  the  contrary,  if,  when  made, 
the  agreements  create  no  vested  right  because  made  sub- 
ject to  the  i)Ower  of  the  legislature  to  revoke  or  modify 
them,  then  in  legal  contemplation  they  are  without  force, 
and  the  power  of  city  councils  to  make  them  is  a  mere 
pretense.  It  is  a  delegated  power  to  make  an  agreement 
which  cannot  bind,  or  ought  not  to  bind,  one  party,  the 
corporation,  because  it  does  not  bind  the  other  party,  the 
state.  In  respect  to  such  power  the  city  is  the  agent  of 
the  state;  and,  besides  being  anomalous,  the  proposition 
that  the  city  and  company  will  be  bound  by  such  con- 
tracts, and  the  state  not  bound,  is  manifestly  unjuFt  and 
unfavorable  to  the  public  interests." 

And  this  power  of  the  legislature  is  my  answer  to  the 
proposition  heretofore  stated  that  when  a  local  franchise 
is  granted  with  the  approval  of  the  electors  it  is  beyond 
any  power  in  the  state. 


96 

On  this  view  of  these  new  constitutional  provisions 
the  legislature  can  grant  relief  from  an  improvident  local 
franchise,  whether  for  thirty  years  or  any  less  period. 

The  danger  of  a  thirty-year  grant,  which  is  irrevocable 
and  inviolable,  is  that  long  before  the  thirty  years  have 
expired,  the  terms  of  the  franchise  may  become  alto- 
gether unreasonable  and  unjust  to  either  the  one  or  the 
other  of  the  parties  to  it. 

The  construction  which  retains  the  power  of  the  legis- 
lature, is  much  more  to  be  preferred  than  that  which  per- 
mits either  the  grantor  or  the  grantee  to  bind  itself 
absolutely  for  thirty  years. 


97 


VL 

Conclusive  proof  of  the  implied  obligation  of  the 
city  of  Detroit  to  permit  the  street  railway  service  to 
contiune  after  Nov.  14,  1909,  is  found  in  the  fact 
that  the  public  service  is  of  such  paramount  and  over- 
whelming importance  that  the  common  council  of 
the  city  could  not  be  induced,  with  any  intention  that 
its  order  would  be  obeyed  or  enforced  to  pass  a  reso- 
lution directing  the  Detroit  United  Railway  to  stop 
operating  its  cars  and  to  remove  its  tracks  and  over- 
head structures  from  the  streets. 

This  is  a  practical  and  most  instructive  illustration  of 
tlie  obligation  of  "both  the  city  and  ihe  street  railway  com- 
pany to  serve  the  general  public. 

That  the  common  council  of  the  city  of  Detroit  appre- 
ciates the  nature  of  the  dilemma  with  which  it  is  con- 
fronted, is  shown  by  an  ordinance  which  it  has  passed, 
but  was  prevented  from  giving  effect  "by  publication,  by 
an  injunction  issued  by  the  United  States  circuit  court 
for  the  eastern  district  of  Michigan  at  the  suit  of  the 
Guaranty  Tlnist  Company  of  New  York. 

The  first  and  second  sections  of  that  ordinance  are  as 
follows : 

Section  1.  On  and  after  the  passage  of  this  ordinance, 
every  street  railway  company,  its  successors  or  assigns, 
operating  street  railways  in  the  city  of  Detroit,  which 
operates  any  street  car  on  any  street  in  the  whole  or  any 
part  of  which  its  right  to  operate  cars  has  expired,  or  on 
any  street  in  tJie  whole  or  any  part  of  which  its  right  to 
operate  street  cars  was  never  legally  obtained,  shall  oper- 
ate all  of  its  cars  over  the  whole  of  said  line  or  route  of 


98 

which  said  street  is  a  part  upon  the  following  terms  and 
conditions : 

Stection  2.  The  operation  of  a  single  car  by  said  cor- 
poration on  any  street  over  that  portion  where  its  right 
to  operate  street  cars  has  expired,  or  on  any  street  over 
that  portion  where  its  right  to  operate  street  cars  was 
never  legally  obtained,  shall  constitute  an  acceptance  of 
the  terms  herein  set  forth. 

Other  sections  obligate  the  street  railway  company 
to  sell  on  its  cars  five  tickets  for  fifteen  cents,  with  rights 
of  transfer  to  any  other  line  or  route  operated  by  the 
company. 

Other  obligations  are  also  imposed  on  the  street  rail- 
way company. 

Although  the  city  has  never  been  able  to  give  this  or- 
dinance effect  and  force,  it  may  be  referred  to  for  the 
purpose  of  showing  the  attitude  of  the  municipal  author- 
ities. 

It  is  a  frank  and  open  confession  on  the  part  of  the 
common  council  that  it  does  not  propose  to  take  the 
responsibility  of  ordering  the  Detroit  United  Railway  to 
stop  the  service  on  the  lines  in  question. 

But  it  is  a  very  simple  and  plain  proposition  that  the 
city  cannot  force  a  contract  on  the  Detriot  United  Rail- 
way in  any  such  way. 

The  Detroit  United  Railway  being  in  the  adverse  and 
hostile  possession  of  the  streets  and  rights  in  controversy, 
it  is  legally  impossible  to  raise  any  implied  or  express 
promise  on  its  part  to  pay  rent  or  do  any  other  thing  in 
recognition  of  the  alleged  superior  title  and  claims  of 
the  city  of  Detroit. 

The  attitude  of  the  parties  toward  each  other  forbids 
the  creation  of  any  new  contract  between  them,  and  the 


99 

declaration  of  one  of  the  parties  that  a  continuance  of 
tile  hostile  relations  shall  amount  to  an  acceptance  of  con- 
tract obligations,  is  a  manifest  al>surdity. 

The  Supreme  Court  of  Michigan  has  so  held.  (Hogsett 
vs.  Ellis,  17  Mich.,  351-367;  Wilmarth  vs  Palmer,  34 
Mich.,  347.) 

lu  Hogsett  vs.  Ellis,  Judge  Ohristiancy  said : 

"It  is  very  clear  that  assump.sit  for  use  and  occupation 
cannot  be  maintained  where  the  relation  of  landlord  and 
tenant  did  not  exist  during  the  occupancy,  or  wlien  the 
holding  was  adverse  to  the  owner,  because,  among  other 
reasons,  a  disputed  title  can  not  be  tri^  in  an  action  of 
assumpsit." 

In  Wilmarth  vs.  Palmer,  Judge  Campbell  said: 

"The  suggestion  that  the  tenant  held  adversely  would 
destroy  the  relation  of  landlord  and  tenant  entirely,  and 
be  equally  fatal  as  an  objection  to  recovering  rent." 

The  law  applicable  to  the  case  was  settled  by  the 
Supreme  Court  of  Michigan  as  long  ago  as  Ward  vs.  War- 
ner, 8  Mich.  508. 

In  tbat  case  the  owner  of  a  private  canal  which  had 
been  cut  on  his  land  and  for  the  major  part  at  his  ex- 
pense, gave  notice  that  parties  using  the  canal  would  be 
charged  twenty-five  cents  for  each  1,000  feet  of  logs  that 
they  might  run  through  it. 

Some  of  the  parties  notified  replied  that  they  denied 
the  right  of  the  owner  to  charge  tolls  for  the  use  of  the 
canal. 

In  an  action  of  assumpsit  to  recover  compensation 
for  a  subsequent  use  of  the  canal,  the  court,  by  Chief 
Justice  Martin,  among  other  things  said : 


100 

"For  tlie  purpose  of  a  revocation  of  the  general  li- 
cense, and  a  declaration  that  conipensa+jon  would  there- 
after be  demanded,  the  notice,  having  come  to  the  knowl- 
edge of  the  defendants,  was  sufficient  and  competent  to 
impose  upon  them  a  liability  to  pav  for  its  use,  accord- 
ing to  the  terms  of  the  notice,  if  subsequently  used,  Jiad 
the  right  to  demand  any  compensation  been  acknowl- 
edged, or  recognized  and  not  denied;  for  in  such  case 
the  law  will  presume  that  they  used  it  upon  the  terms 
imposed,  and  raise  the  corresponding  dutj',  and  imply 
tlie  contract  accordingly.  But  in  the  present  case  all 
such  implication  is  precluded  by  the  fact  that  the  de- 
fendants denied  any  right  to  denumid  compensation  for 
the  use,  and  used  it  in  defiance  of  the  plaintiffs  claim, 
and  under  the  claim  of  right  in  themselves;  and  they 
cannot  therefore  be  presumed  to  have  acceeded  to  the 
terms  imposed. 

"If,  then,  any  duty  can  be  implied,  it  is  to  pay  what 
such  use  is  reasonably  worth.  Now,  as  already  re- 
marked, the  plaintiff  had  a  right  to  require  payment, 
as  a  condition  to  the  use  of  the  canal;  and  had  he  re- 
quired such,  but  fixed  no  price,  and  the  defendants  had 
used  it  with  knowledge  of  such  terms,  and  under  the 
condition,  beyond  doubt  the  duty  would  be  raised  to  pay 
Avhat  such  use  would  be  reasonably  worth;  but  if  the 
effect  of  a  denial  of  the  right  to  demand  compensation, 
and  use  of  the  canal  in  contravention  of  the  claims  as- 
serted by  the  plaintiff,  will  prevent  the  implication  of 
a  duty  to  pay  a  specific  rate  imposed,  how  can  it  be 
said  that  it  will  still  raise  the  duty  of  paying  according 
to  its  worth?  If  the  denial  goes  to  anything,  it  must 
go  to  the  whole  claim  of  the  plaintiff  for  compensation, 
and  will  preclude  every  presumption  of  the  recognition 
of  a  duty  upon  which  a  contract  can  be  implied;  while, 
on  the  other  hand,  if  the  law  will  imply  a  duty,  it  will 


101 

imply  one  co-extensive  with  the  terms  imposed.  It  goes 
to  the  whole  remedy,  whether  for  a  specific  price,  or  for 
reasonable  compensation.  But  the  law  implies  the  duty 
only  where  the  right  of  dominion  over  the  subject  mat- 
ter is  conceded,  or  not  questioned;  and  never  where  the 
use  is  under  an  adverse  claim  of  right,  or  a  denial  of 
that  asserted/' 

The  common  council  of  the  city  of  Detroit  has  still 
further  recognized  the  paramount  importance  of  the 
public  service  by  passing  the  preambles  and  resolutions 
of  October  19,  and  October  26,  1909,  and  by  failing  to 
reject  and  tacitly  accepting  the  counter  proposition  of 
the  company  contained  in  the  communication  and  notice 
served  on  the  city  on  the  13th  day  of  November,  1909, 
and  printed  in  the  published  proceedings  of  the  council 
of  November  16,  1909. 


PREAMBLE     AND    RESOLUTION. 

October  19,   1909. 
By  Aid.  Heineman: 

Whereas,  Street  railway  franchises  of  the  Detroit 
United  Railway  or  its  predecessor  in  title,  and  all  right 
to  operate  street  railways  upon  the  following  streets  and 
portions  of  streets  in  the  city  of  Detroit  have  heretofore 
expired,  or  will  have  expired  on  November  14,  1909,  to- 
wit: 

MICHIGAN   AVENUE. 

The  north  track  from  Woodward  avenue  to  Rowland 
street,  and  from  Porter  street  to  Livernois  avenue;  the 
south  ti'ack  from  Abbott  street  to  Livernois  avenue. 


102 

CONGBESS   AND    BAKER    STREETS. 

On  Mt.  Elliott  avenue,  from  Jefferson  avenue  to  Fort 
street  east;  on  Fort  street  east  to  Brush  street;  on 
Brush  street,  from  Fort  street  east  to  Congress  street. 

The  north  track  on  Congress  street,  from  Brush  street 
to  Woodward  avenue;  all  tracks  from  Woodward  avenue 
westerly  to  Sixth  street;  on  Brooklyn  avenue  from  Porter 
street  to  Baker  street;  on  Baker  street  from  Brooklyn 
avenue  to  Twenty-fourth  street;  on  Twenty-fourth  street 
from  Baker  street  to  Dix  avenue;  on  Dix  avenue  from 
Twenty-third  street  to  Livernois  avenue. 

CASS  AVENUE  AND  THIRD  STREET, 

On  Larned  street  from  Third  street  to  Griswold  street ; 
on  Griswold  street  from  Larned  street  to  State  street; 
on  State  street,  a  single  track  from  Griswold  street  to 
Rowland  street;  all  tracks  on  State  street,  between  Row- 
land street  and  Cass  avenue;  on  Cass  avenue  from  State 
street  to  Ledyard  street;  on  Ledyard  street  from  Cass 
avenue  to  Third  avenue;  on  Third  avenue  from  Ledyard 
street  to  Holden  avenue;  on  Holden  avenue  from  Third 
avenue  to  Greenwood  avenue. 

TRUJMBULL  AVENUE. 

From  Abbott  street  northerly  to  the  railroad  crossing. 

ATV7ATER    STREET. 

From  Woodward  avenue  to  Brush  street;  on  Brush 
street  from  Atwater  street  to  Jefferson  avenue, 

WOODWARD   AVENUE. 

From  Pallister  avenue  to  the  railroad  crossing;  from 
the  railroad  crossing  southerly  to  Grand  River  avenue; 
from  Fort  street  west  southerly  to  the  river,  all  tracks 
except  one. 


103 

BRUSH  AND  EUSSBLL  STREETS. 

On  Brush  street  from  Gratiot  avenue  to  Kowena  street ; 
on  Rowena  street  from  Brush  street  to  St.  Antoine 
street;  on  St.  Antoine  street  from  Rowena  to  Fams- 
worth  street;  on  Farnsworth  street  from  St.  Antoine 
street  to  Russell  street;  on  Russell  street  north  from 
Farnsworth  street  to  the  end  of  the  line. 

CHENS  STREET. 

On  Atwater  street  from  Jos.  Campau  avenue  to  Chene 
street;  on  Chene  street  from  Atwater  street  northerly  to 
Newton  street. 

JEFFERSON    AVENUE. 

From  a  point  194  feet  west  of  the  west  line  of  Fifth 
street  to  Concord  avenue;  from  Field  avenue  to  a  point 
200  feet  east  of  Baldwin  avenue. 

GRATIOT   AVENUE. 

On  Monroe  avenue,  the  northwest  track  from  Wood- 
ward avenue  to  Farmer  street;  on  Monroe  avenue,  both 
tracks  from  Farmer  street  to  Randolph  street;  on  Ran- 
dolph street  from  Monroe  avenue  to  Gratiot  avenue;  on 
Gratiot  avenue  from  Randolph  street  to  Sheridan  ave- 
nue. 

MACK  AVENUE. 

From  Gratiot  avenue  to  Baldwin  avenue. 

Therefore  be  it 

Resolved,  and  the  common  council  of  the  city  of  De- 
troit especially  declare.  That  all  right  and  title  on  the 
part  of  said  company,  the  Detroit  United  Railway,  to 
such  franchises  and  tracks  maintained  thereunder  in 
the  said  streets  above  mentioned,  have  heretofore  termin- 
ated or  will  have  terminated  on  November  14,  1909;  and 
that  any  further  use  on  the  part  of  said  company  of  said 


104 

tracks  located  as  above  set  fortli,  where  the  right  to 
operate  cars  has  expired,  is  by  sufferance  only  and  with- 
out express  or  implied  waiver  upon  the  part  of  the  city 
of  Detroit  to  enforce  its  rights  in  regard  to  such  streets 
and  to  re-possess  itself  of  the  same;  and  that  any  further 
use  on  the  part  of  said  company  of  said  tracks  where  the 
right  to  operate  cars  will  have  expired  November  14, 
1909,  after  said  date,  is  by  sufferance  only  and  without 
express  or  implied  waiver  upon  the  part  of  the  City  of 
Detroit  to  enforce  its  rights  in  regard  to  such  streets 
and  to  re-possess  itself  of  the  same. 

Adopted  as  follows: 
Yeas — Aid.  Allan,  Burton,  Deimed,  Ellis,  Field,  Friewald, 
Garvey,  Glinnan,  Goeschel,  Grindley,  Gutman,  Harpfer, 
Heineman,  Keating,  Koenig,  Konkel,  Korte,  Lempke,  Os- 
trowski,  Owen,  Reinhardt,  Eosenthal,  Rutter,  Schulte, 
Shapland,  Skrzycki,  Theisen,  Thompson,  Tossy,  Trevor, 
Vernor,  Walsh,  Watson,  Zoeller,  Zink  and  the  President 
pro  tern — 35. 

Nays — None. 


PREAMBLE     AND     RESOLUTION. 

October  26,  1909. 
By  Aid.  Heineman : 

Whereas,  There  is  now  pending  in  the  Circuit  Court 
of  the  United  States  for  the  Eastern  District  of  Michi- 
gan, Southern  Division,  a  case  entitled:  Guaranty  Trust 
Company  of  New  York  vs.  City  of  Detroit  and  others, 
which  involves  the  validity  of  an  ordinance  passed  by 
the  common  council  of  the  city  of  Detroit  and  commonly 
called  the  Hally  Ordinance,  which  ordinance  among 
other  things  prescribed  the  terms  and  conditions  under 


105 

which  a  street  railway  might  continue  to  operate  cars 
wlien  and  where  its  franchise  right  to  do  so  had  ex- 
pired; and 

Whereas,  The  court  has  issued  a  temporary  injunction 
whereby  the  city  of  Detroit,  its  agents,  servants  and  at- 
torneys are  strictly  restrained  and  enjoined  from  pub- 
lishing or  attempting  to  publish  that  ordinance  and  are 
likewise  enjoined  from  enforcing  or  attempting  to  en- 
force by  any  means  whatsoever  the  said  ordinance;  and 

Whereas,  Said  ordinance  is  without  force  or  effect 
until  published  and  it  is  the  duty  of  the  city  of  Detroit 
to  respect  and  obey  the  mandate  of  the  court;  and 

Whereas,  The  franchise  right  of  the  Detroit  United 
Railway,  as  the  successor  in  title,  to  operate  a  street 
railway  on  Woodward  avenue  from  Pallister  avenue  to 
the  railroad  crossing  expired  July  13,  1906,  and  has  not 
been  renewed  by  the  City  of  Detroit ;  and 

Whereas,  The  francliise  right  of  the  Detroit  United 
Railway,  as  the  successor  in  title,  to  operate  a  street 
railway  line  on  Twenty-fourth  street  from  Baker  street 
to  Dix  avenue,  and  on  Dix  avenue  from  Twenty-fourth 
street  to  Livernois  avenue,  either  expired  on  April  17, 
1906,  or  will  have  expired  on  November  14,  1909,  and 
the  city  of  Detroit  has  granted  no  franchise  to  operate 
cars  on  said  streets  after  November  14,  1909;  and 

Whereas,  The  franchise  riglit  of  the  Detroit  United 
Railway,  as  the  successor  in  title,  to  operate  a  street 
railway  line  on  the  following  streets  and  portions  of 
streets  will  have  expired  on  November  14,  1909,  to-wit: 

MICHIGAN    AVENUE. 

The  north  track  from  Woodward  avenue  to  Rowland 
street,  and  from  Porter  street  to  Livernois  avenue;  the 
south  track  from  Abbott  street  to  Livernois  avenue. 


106 

CONGRESS    AND    BAKER    STREETS. 

On  Mt.  Elliott  avenue,  from  Jefferson  avenue  to  Fort 
street  east;  on  Fort  street  east  to  Brush  street;  on 
JSrush  street,  from  Fort  street  east  to  Congress  street. 

The  north  track  on  Congress  street,  from  Brush  street 
to  Woodwad  avenue;  all  tracks  from  Woodward  avenue 
westerly  to  Sixth  street;  on  Brooklyn  avenue  from  Porter 
street  to  Baker  street;  on  Baker  street  from  Brooklyn 
avenue  to  Twenty- fourth  street;  on  Twenty- third  street 
to  Dix  avenue  from  Baker  street;  on  Dix  avenue  from 
Twenty-third  street  to  Twenty-fourth  street. 

CASS  AVENUE  AND  THIRD  STREET. 

On  Larned  street  from  Third  street  to  Griswold 
street;  on  Griswold  street  from  Larned  street  to  State 
street;  on  State  street,  a  single  track  from  Griswold 
street  to  Kowland  street;  all  tracks  on  State  street,  be- 
tween Kowland  street  and  Cass  avenue;  on  Cass  avenue 
from  State  street  to  Ledyard  street ;  on  Ledyard  street 
from  Cass  avenue  to  Third  avenue;  on  Third  avenue  from 
Ledyard  street  to  Holden  avenue ;  on  Holden  avenue  from 
Third  avenue  to  Greenwood  avenue. 

TRUMBULL  AVENUE. 

From  Abbott  street  northerly  to  the  railroad  crossing. 

ATWATER    STREET. 

From  Woodw^ard  avenue  to  Brush  street;  on  Brush 
street  from  Atwater  street  to  Jefferson  avenue. 

WOODWARD   AVENUE. 

From  the  railroad  crossing  southerly  to  Grand  Kiver 
avenue;  from  Fort  street  west  southerly  to  the  river,  all 
tracks  except  one. 

BRUSH   AND   RUSSELL   STREETS. 

On  Brush  street  from  Gratiot  avenue  to  Rowena  street ; 
on    Rowena    street    from    Brush    street   to    St.    Antoine 


107 

street;  on  St.  Antoine  street  from  Rowena  to  Fansworth 
street;  on  Farnsworth  street  from  St.  Antoine  street  to 
Russell  street;  on  Russell  street  north  from  Farnsworth 
street  to  the  end  of  the  line. 

CHENE    STEEET. 

On  Atwater  street  from  Jos  Campau  avenue  to  Chene 
street;  on  Chene  street  from  Atwater  street  northerly 
to  Newton  street. 

JEFFERSON    AVENUE. 

From  a  point  194  feet  west  of  the  w^est  line  of  Fifth 
street  to  Concord  avenue;  from  Field  avenue  to  a  point 
200  feet  east  of  Baldwin  avenue. 

GRATIOT    AVENUE. 

On  Monroe  avenue,  the  northwest  track  from  Wood- 
ward avenue  to  Farmer  street;  on  Monroe  avenue,  both 
tracks  from  Farmer  street  to  Randolph  street;  on  Ran- 
dolph street  from  Monroe  avenue  to  Gratiot  avenue;  on 
Gratiot  avenue  from  Randolph  street  to  Sheridan  ave- 
nue. 

MACK  AVENUE. 

From  Gratiot  avenue  to  Baldwin  avenue. 

And  the  city  of  Detroit  has  granted  no  franchise  right 
to  operate  cars  on  said  streets  or  portions  of  streets 
after  November  14,  1909 ;  and 

Whereas,  All  of  said  streets  and  portions  of  streets 
would  after  November  14,  1909,  be  subject  to  the  terms 
and  conditions  of  the  Hally  Ordinance,  if  the  same  is 
a  valid  enactment  and  is  accepted  by  the  Detroit  United 
Railway;  and 

Whereas,  No  term  franchise  or  agreement  under  the 


108 

revised  constitution  can  be  valid  or  binding  unless  the 
franchise  or  agreement  shall  have  first  received  the 
affirmative  vote  of  three-fifths  of  the  electors  of  the  city; 
and 

Whereas,  Under  the  revised  constitution  every  street 
railway  company  is  denied  the  right  to  use  the  highways, 
streets,  alleys  or  public  places  of  any  city  without  the 
consent  of  the  duly  constituted  authorities  of  such  city, 
and  is  denied  the  right  to  transact  a  local  business  in 
the  city  without  first  obtaining  a  franchise  therefor  from 
such  city.    Therefore,  be  it 

Resolved,  That  consent,  permission  and  authority  is 
liereby  granted  to  the  Detroit  United  Eailway  to  con- 
tinue from  day  to  day  after  November  14,  1909,  to  oper- 
ate its  cars  upon  the  streets  and  portions  of  streets 
above  set  forth  under  the  same  terms  and  conditions, 
except  as  to  percentages  on  gross  receipts  now  prevail- 
ing in  the  City  of  Detroit,  whether  due  to  contract  agree- 
ment or  not,  upon  the  payment  weekly  by  the  Detroit 
United  Railway  to  tlie  city  treasurer  of  the  sum  of  three 
hundred  dollars  for  each  day  that  the  streets  and  por- 
tions of  streets  above  set  forth  are  used  by  said  company 
in  the  operation  of  its  railway  or  railways ;  and  be  it  fur- 
ther 

Resolved,  That  this  resolution  is  subject  to  revocation 
at  any  time  at  the  will  of  the  common  council  or  of  the 
people  of  the  city  of  Detroit. 

Adopted  as  follows: 

Yeas — Aid.  Allan,  Burton,  Deimel,  Ellis,  Field,  Gar- 
vey,  Glinnan,  Goeschel,  Grindley,  Gutman,  Harpfer, 
Heineman,  Keating,  Koenig,  Konkel,  Korte,  Lempke,  Os- 
trowski,  Owen,  Reinhardt,  Rosenthal,  Schulte,  Shapland, 
Skrzycki,  -Theisen,  Thompson,  Trevor,  Vernor,  Walsh, 
Watson,  Wing  and  tlie  President — 32. 

Nays — None. 


109 


RECONSIDERATION. 

Aid.  Field  moved  to  reeoDsider  the  vote  by  which  the 
resolution  was  adopted. 

Aid.  Heineman  moved  to  suspend  Rule  28  for  the  pur- 
pose of  indefinitely  postponing  the  motion  to  reconsider, 
which  motion  prevailed. 

Aid.  Heineman  then  moved  that  the  motion  to  recon- 
sider be  indefinitely  x>ostponed,  which  motion  prevailed. 

The  regular  order  was  resumed. 


COMMUNICATION   AND    NOTICE. 

November  13,  1909. 

To  the  Honorable  the  Mayor  and.  Common  Council: 

Gentlemen: — This  company  has  been  informed  of  the 
passage  by  your  honorable  body  of  two  certain  resolu- 
tions concerning  the  operation  by  the  company  of  its 
lines  of  street  railway  on  certain  streets,  the  purpose 
of  said  resolutions  being  intended  to  express  certain 
claims  made  by  your  honorable  body  in  behalf  of  the 
city  respecting  the  right  of  the  company  to  operate  its 
cars  on  said  certain  streets,  and  also  to  state  certain 
terms  and  conditions  which  may  be  enforced  against  the 
company  after  the  14th  of  November,  1909. 

It  is  noted  that  one  of  these  resolutions,  that  adopted 
by  your  honorable  body  October  19,  1909,  which  only 
came  to  the  knowledge  of  this  company  through  the  or- 
dinary channels  of  publication,  states  that  certain  fran- 
chises have  heretofore  terminated  or  will  have  termin- 
ated on  November  11,  1909,  and  that  any  further  use  by 
the  company  of  its  tracks  and  franchises  on  the  streets 


110 

and  parts'  of  streets  therein  named,  will  be  by  the  suffer- 
ance only  and  without  express  or  implied  waiver  on  the 
part  of  the  city  respecting  its  rights  in  regard  to  such 
streets. 

The  other  resolution,  namely,  that  passed  at  a  meeting 
of  your  honorable  body  October  26,  1909,  a  certified  copy 
of  which  was  served  on  this  company  November  11,  1909, 
recites  that  the  city  claims  that  on  the  certain  streets 
and  avenues  therein  named  that  no  franchise  right  has 
been  granted  to  operate  cars  on  said  streets  or  parts  of 
streets  after  November  14,  1909,  and  said  resolution  pro- 
vides that  the  continued  operation  of  cars  by  the  com- 
pany on  said  streets  after  said  date,  shall  be  conditioned 
on  their  operation  by  the  company  under  and  subject  to 
all  the  terms  and  conditions  under  which  they  are  now 
operated,  except  as  to  the  collection  of  a  specific  tax  as 
heretofore  provided,  and  upon  an  added  condition  that 
the  company  shall  pay  to  the  city  a  stated  sum  of  three 
hundred  dollars  (|300.00)  per  day. 

The  company  does  not  agree  with  the  views  and  claims 
stated  in  said  resolutions,  which,  in  its  opinion,  are  con- 
trary to  the  rights  of  the  company,  and  believes  that 
after  due  investigation  and  consideration,  you  will  con- 
cede that  your  position  is  erroneous.  The  company, 
liowever,  recognizes  that  you  are  equally  desirous  with 
tlie  company  that  the  public  shall  not  be  deprived  of 
an}'  service  that  they  have  heretofore  enjoyed,  and  that 
the  interest,  comfort  and  convenience  of  the  public  will 
be  best  served  by  continuing  uninterruptedly  the  service 
as  now  rendered,  pending  the  results  of  an  adjustment 
of  all  matters  of  difference  which  it  is  believed  all  par- 
ties desire. 

The  company,  therefore,  without  waiving  any  rights 
or  privileges  to  which  it  is  entitled  under  present  con- 
ditions, and  conceding  that  the  city  does  not  waive  any 


Ill 

of  its  rights  or  privileges,  and  witliout  prejudice  to  the 
rights  or  privileges  of  either  the  city  or  the  company, 
will,  in  the  exercise  of  its  rights  and  duties,  continue  to 
maintain  and  operate  the  lines  in  question  under  the 
terms  and  conditions  under  which  the  same  are  now 
maintained  and  operated,  and  to  render  service  as  hereto- 
fore, and  for  the  reasons  above  indicated  and  to  avoid 
litigation  will  in  addition  pay  to  the  city  the  sum  of 
three  hundred  dollars  (fSOO.OO)  per  day  fOr  the  time 
being,  or  until  such  time  as  the  relations  between  the 
company  and  the  city  are  readjusted. 
Yours  very  truly, 

J.    C.    HUTCHINGS, 

President. 
Ordered  printed  in  proceedings  and  placed  on  file. 

By  this  truce,  neither  the  city  of  Detroit  or  the  De- 
troit United  Railway  gained  anything.  The  general 
public  gained  everything.  The  right  of  the  people  to 
continue  to  go  and  come  on  the  street  cars  was  recog- 
nized by  both  combatants.  It  is  like  a  truce  between 
two  opposing  armies,  to  permit  them  to  perform  the 
higher  duty  of  removing  their  dead  and  wounded  from 
the  field  of  battle. 

I  submit  this  question.  Which  would  be  more  in  ac- 
cord with  the  American  system  of  jurisprudence,  and 
with  the  sentiments  of  a  thoroughly  ci\ilized  race  of 
men,  to  make  the  truce  permanent,  and  settle  the  con- 
troversy by  submitting  the  question  whether  the  rates  of 
fare  charged  by  the  street  railway  company  are  excessive 
or  not,  to  a  court  of  competent  jurisdiction,  possessed  of 
the  necessary  legal  machinery,  and  charged  with  the 
duty,  of  doing  equal  and  exact  justice,  or  to  renew  a 
barbarous  struggle,  in  whicli  each  of  the  husky  warriors 
seeks   to   decide   to   issue   liimself,   and   proposes   to   use 


112 

wliatever  power  lie  may  possess  to  accomplish  his  own 
purpose. 

Arbitration  or  war! 

Which  is  the  best? 

The  constitution  and  laws  of  Michigan  rightly  con- 
strued do  not  permit  a  street  railway  war  at  the  ex- 
piration of  each  local  grant  or  franchise.  A  matter  so 
important  to  the  general  public,  to  the  people  of  a  muni- 
cipality, and  to  the  street  railway  company  concerned, 
should  not  be  made  the  football  of  local  politicians,  the 
food  of  the  sensational  press,  and  the  war  cry  of  schem- 
ing and  ambitious  demagogues. 

The  city  of  Detroit  is  Charybdis.  The  Detroit  United 
Railway  is  Scylla.  The  Public  is  Odysseus  sailing,  be- 
tween them.  He  will  lose  some  of  his  men  to  Scylla,  but 
he  will  escape  from  the  engulfing  water  of  Charybdis. 

Earth  Shaker  himself  cannot  stop  Odysseus,  the  pub- 
lic, from  navigating  the  streets  of  Detroit.  Of  his  ship 
this  may  be  said: 

"Now  from  the  rocks  the  rapid  vessel  flies, 
And  the  hoarse  din  like  distant  thunder  dies; 
To  Sol's  bright  isle  our  voyage  we  pursue, 
And  now  the  glittering  mountains  rise  to  view." 

— Odyssey,  Pope's  Translation,  XII. 

Since  the  foregoing  paragraphs  were  written  and  on 
December  14,  1909,  just  thirty  days  after  the  alleged 
expiration  of  the  local  grants  in  question,  the  common 
council  passed  a  resolution,  introduced  by  Aid.  Glinnan, 
and.  approved  by  tJhe  mayor,  and  which  resolution  as  re- 
ported by  the  committee  on  franchises,  with  the  action 
of  the  common  council  thereon,  is  as  follows: 


113 


GLINNAN  RESOLUTION. 

December  14,  1909. 

To  the  Honorable  Common  Council : 

Gentlemen: — Your  committee  on  franchises,  to  whom 
was  referred  the  resolution  presented  by  Aid.  Glinnan  at 
the  session  of  the  common  council  of  November  30th 
(J,  O.  C,  p.  1586),  respectfully  report  that  we  have  given 
the  matter  careful  consideration.  Your  committee  has 
been  in  consultation  with  the  corporation  counsel  on  this 
matter  and  is  in  receipt  of  a  written  opinion,  under  date 
of  December  13,  1909,  on  the  various  legal  points,  etc., 
involved.  This  resolution  provides  for  a  lower  rate  of 
street  car  fare,  pending  the  permanent  settlement  of  the 
entire  street  railway  question,  and  is,  in  the  opinion  of 
your  committee  a  proper  measure  for  adoption  by  your 
honorable  body.  A  few  changes  in  the  phraseology  and 
certain  other  amendments  are  recommended  by  the  cor- 
I>oration  counsel  and  have  been  incorporated  into  the 
resolution  which  is  herewith  submitted  as  amended  with 
the  recommendation  that  it  be  adopted. 

Respectfully  submitted, 

John  Harpfek, 

Thos.  E.  Glinnan, 

Geo.  a,  Owen, 

Louis  E.  Tossy, 

Committee  on  Franchises. 

Accepted  and  leave  being  granted  the  following  resolu- 
tion was  offered : 

By  Aid.  Hai-pfer : 

Whereas,  The  franchise  right  of  the  Detroit  United 
Railway,  as  successor  in  title,  to  operate  a  street  railway 
on  certain  streets  and  avenues  in   the  City  of  Detroit, 


114 

some  of  which  are  hereinafter  designated,  has  now  ex- 
pired, and  ceased  to  exist,  and, 

Whereas,  negotiations  and  litigation  looking  toward  a 
satisfactory  arrangement  for  the  operation  of  street  cars 
on  said  several  streets  and  avenues  in  the  city  of  Detroit, 
either  by  franchise  right  or  otherwise,  are  in  progress; 
and, 

Whereas,  said  arrangement  has  not  yet  been  perfected 
and  no  definite  information  is  at  hand  as  to  w^hen  said 
arrangement  will  be  perfected;  and, 

WTiereas,  it  is  contrary  to  the  laws  and  the  constitution 
of  the  State  of  Michigan  for  the  said  Detroit  United  Rail- 
way or  any  other  person,  persons,  corporation  or  com- 
pany to  operat;e  a  street  car  line  upon  and  along  any 
street  or  avenue  in  the  city  of  Detroit  without  authority 
from  the  said  city;  and, 

.  Whereas,  there  is  now  in  force  a  temporary  arrange- 
ment or  agreement,  embodied  in  a  resolution  of  this  body 
which  was  adopted  on  the  26th  day  of  October,  1909,  and 
accepted  by  the  Detroit  United  Railway,  between  the  city 
of  Detroit  and  the  Detroit  United  Railway,  whereby  the 
said  Detroit  United  Railway  is  permitted  to  operate 
street  cars  upon  and  along  certain  streets  in  the  city  of 
Detroit  upon  the  payment  by  the  Detroit  United  Railway 
to  the  city  of  Detroit  of  the  sum  of  $300  per  day,  payable 
weeKly,  which  said  arrangement  or  agreement  in  no  way 
efifects  pending  litigation  and  negotiations  looking  to  a 
permanent  settlement  of  the  differences  between  the  city 
of  Detroit  and  the  said  Detroit  United  Railway. 

Therefore,  Be  it  Resolved,  That  in  addition  to  all  other 
requirements,  and  ip  addition  to  said  resolution  adopted 
the  26th  day  of  October,  1909,  and  referred  to  commonly 
as  the  "rental  resolution,"  w^hich  was  passed  as  a  tem- 
porary arrangement  pending  litigation  and  negotiation, 
consent,  permission  and  authority  is  hereby  granted  to 


115 

the  Detroit  United  Railway  to  continue  from  day  to  day 
after  the  acceptance  of  this  resolution,  as  hereinafter 
designated,  to  operate  its  car^  upon  and  along  those 
streets,  avenues  and  portions  of  the  same  hereinafter  set 
forth,  upon  the  following  terms  and  conditions  as  to  rate 
of  fare,  to- wit:  The  rates  of  fare  for  a  single  ride  for  a 
continuous  trip  in  any  one  direction  over  any  one  of  the 
streets,  avenues,  or  portions  thereof  hereinafter  set  out, 
shall  be  5  cents,  for  which  the  passenger  shall  be  entitled 
to  such  ride  and  to  a  ticket  or  transfer  check  to  be  given 
to  the  passenger  by  the  conductor  on  the  car,  good  for  a 
ride  over  any  intersecting  line  or  route  operated  by  said 
Detroit  United  Railway,  provided  such  ticket  is  presented 
on  the  next  regular  car  on  such  other  route  within  15 
minutes  after  such  passenger  leaves  the  car  on  which  he 
paid  the  5-cent  fare  and  received  such  transfer  check. 

Said  Detroit  United  Railway  shall  keep  on  all  cars 
operated  pursuant  to  this  resolution,  between  5:15  a.  m. 
and  7 :30  p.  m.  of  each  day,  tickets  to  be  sold  in  strips  or 
packages  of  8  for  25  cents,  each  of  which  tickets  shall  be 
accepted  by  said  Detroit  United  Railway  for  a  single 
fare  in  either  direction  over  the  line  or  street  on  which 
it  is  presented,  and  which  is  hereinafter  set  out. 

Said  Detroit  United  Railway  shall  also  keep  on  sale 
on  its  cars  operated  in  pursuance  of  this  resolijtion,  be- 
tween the  hours  of  7:30  p.  m.  and  5:15  a.  m.  of  each  day, 
tickets  to  be  sold  in  strips  or  packages  of  six  tickets  for 
25  cents,  each  of  which  tickets  shall  be  accepted'  by  the 
said  Detroit  United  Railway  for  a  single  fare  in  either 
direction  over  the  street  or  line  on  which  it  is  presented, 
and  which  is  hereinafter  set  out  in  this  resolution,  and  a 
passenger  presenting  such  a  ticket  shall  be  entitled  to  a 
transfer  good  for  a  continuous  ride  over  any  other  line 
or  route  operated  by  said  Detroit  United  Railway  for  the 
same  or  lower  rate  of  fare,  as  provided  in  this  resolution, 


116 

and  intersecting  the  street  or  line  of  the  car  upon  which 
the  passenger  presented  such  ticket  and  requested  such 
transfer  check. 

The  streets  and  avenues  and  portions  thereof  above  re- 
ferred to  are  described  as  follows,  to-wit : 

MICHIGAN    AVENUE. 

The  north  track  from  Woodward  avenue  to  Rowland 
street,  and  from  Porter  street  to  Livernois  avenue;  tJie 
south  track  from  Abbott  street  to  Livernois  avenue. 

GEATIOT    AVENUE. 

On  Monroe  avenue  the  northwest  track  from  Wood- 
ward to  Farmer,  both  tracks  from  Parmer  to  Randolph; 
on  Randolph  from  Monroe  to  Gratiot  avenue;  on  Gratiot 
from  Randolph  street  to  Sheridan  avenue. 

MACK  AVENUE. 

From  Gratiot  avenue  to  Baldwin  avenue. 

BAKEE  STEBET. 

On  Brooklyn  avenue  from  Porter  street  to  Baker  street ; 
on  Baker  street  from  Brooklyn  to  Twenty-fourth  street; 
on  Twenty-thrid  street  from  Dix  to  Baker  street;  on  Dix 

from  Twenty-third  to  Twenty-fourth  street. 

CHENE  STEEET. 

On  Atwater  street,  from  Jos.  Campau  avenue  to  Chene 
street;  on  Chene  street  from  Atwater  street  northerly  to 
Newton  street. 

BEUSH    STREET. 

On  Brush  street  from  Gratiot  avenue  to  Rowena  street ; 
on  Rowena  street  from  Brush  to  St.  Antoine  street;  on 
St.  Antoine  from  Rowena  to  Farnswortli  street;  on 
Famsworth  from  St.  Antoine  to  Russell  street;  on  Rus- 
sell street  from  Famsworth  northerly  to  the  end  of  the 
line. 


117 

ATWATEE  STREET. 

From  Woodward  avenue  to  Brush  street;  on  Brush 
street  from  Atwater  street  to  Jefferson  avenue. 

WOODWARD  AVENUE. 

From  the  railroad  crossing  southerly  to  Grand  River 
avenue  and  from  Fort  street  west  southerly  to  the  river, 
all  tracks  except  one. 

Be  it  further  resolved  that  the  common  council  reserves 
the  right  to  at  any  time  r€x>eal  this  resolution,  and  it  is 
understood  that  its  passage  by  this  body  is  not  to  alter 
or  amend  or  to  be  a  substitute  for  the  ordinance  passed 
at  a  session  of  the  common  council  on  the  3rd  day  of 
March,  1908,  and  entitled,  "An  ordinance  to  provide  for 
the  oi)eration  of  cars  by  street  railway  companies  oper- 
ating cars  on  any  street  in  which  the  franchise  right  has 
expired,"  and  that  this  resolution  or  agreement,  if  in  ex- 
istence at  the  time  when  the  injunction  issued  by  the 
United  States  Cricuit  Court  for  the  Eastern  District  of 
Michigan,  Southern  Division,  in  the  case  entitled  Guaran- 
ty Trust  Company  vs.  City  of  Detroit  et  al.,  shall  be  modi- 
fied or  dissolved  so  as  to  permit  the  publication  and  en- 
forcement of  said  ordinance,  this  resolution  shall  be  null 
and  void,  and  all  authority  to  act  under  it  and  the  ar- 
rangement made  pursuant  to  it  shall  cease,  and  ^this  reso- 
lution shall  likewise  be  of  no  force  or  effect  unless  con- 
sent in  writing  is  given  hereto  by  the  Detroit  United 
Railway  and  the  Guaranty  Trust  Company  of  New  York 
within  ten  days  after  its  passage. 

Aid.  Harpfer  moved  the  adoption  of  the  resolution. 

Aid.  Heineman  moved  to  refer  the  matter  back  to  the 
Committee  with  instructions  to  ascertain  from  the  rail- 
way company  if  there  is  any  probability  of  the  company 
accepting  the  resolution,  which  motion  was  lofet  as  fol- 
lows: 


118 

Yeas — Allan,  Field,  Freiwald,  Garvej,  Heineman,  Keat- 
ing, Koenig,  Lempke,  Vernor,  Watson — 10. 

Najs — Burton,  Ellis,  Glinnan,  Goescliel,  Grindley,  Gut- 
man,  Harpfer,  Konkel,  Ostrowski,  Owen,  Keinhardt,  Ro- 
senthal, Rutter,  Scliulte,  Sliapland,  Skrzycki,  Thompson, 
Tossy,  Trevor,  Walsh,  Wing,  Zoeller — 2S. 

Aid.  Rosenthal  offered  the  following  amendment: 

Resolved,  That  the  resolution  be  amended  by  adding 
there  to  this  proviso: 

Be  it  further  resolved,  that  the  commissioner  of  public 
works,  be  and  he  is  hereby  instructed  in  the  event  of  the 
refusal  of  acceptance  to  this  resolution  to  notify  the  D. 
U.  B.  to  immediately  remove  its  tracks  from  the  streets 
and  if  the  company  refused  to  comply  within  a  reasonable 
time  that  the  commissioner  do  so  and  charge  the  expense 
to  the  company. 

The  amendment  was  lost. 

The  question  being  on  the  motion  of  AM.  Harpfer,  the 
motion  prevailed  as  follows: 

Yeas — ^Ald.  Burton,  Ellis,  Freiwald,  Garvey,  Glinnan, 
Goeschel,  Grindley,  Gutman,  Harpfer,  Konkel,  Lempke, 
Ostrowski,  Owen,  Reinhardt,  Rosenthal,  Rutter,  Schulte, 
Shapland,  Skrzycki,  Thompson,  Tossy,  Trevor,  Walsh, 
Wing,  Zoeller  and  the  president — 26. 

Nays— Aid.  Allan,  Field,  Heineman,  Keating,  Koenig, 
Vernor  and  Watson — 7. 


119 


VII. 

A  municipal  street  grant  does  not  establish  the 
technical  relation  of  landlord  and  tenant,  which  exists 
in  the  case  of  a  private  landlord  and  his  private  ten- 
ant, and  for  two  reasons :  ( 1 )  the  mtinicipality,  as  the 
alleged  landlord,  is  a  mere  trustee  for  the  public; 
and  (2)  the  company  grantee,  as  the  alleged  tenant, 
is  under  a  legal  obligation  to  serve  the  public.  Hence, 
whatever  the  contract  between  the  muncipality  and 
the  company  may  be,  it  is  subject  to  the  superior 
and  predominate  rights  of  the  public. 

Street  railway  tracks  are  imbedded  in  the  soil;  they 
usually  consist  of  a  cement  foundation  into  which  the 
ties  are  imbedded ;  the  rails  are  spiked  to  the  ties ;  and  the 
ties,  spike  heads,  and  the  lower  flanges  of  the  rails  are 
covered  with  cement  or  brickwork.  The  whole  structure 
becomes  as  much  a  part  of  the  realty  as  any  structure 
known  to  the  art  of  building,  and  it  cannot  be  removed 
without  serious  injury  to  the  street  and  great  inconven- 
ience to  the  public.  , 

If  the  relation  of  landlord  and  tenant  exists,  witli 
the  municipality  as  landlord  and  the  street  railway  com- 
pany as  tenant,  the  question  would  arise  whether  the 
tracks  are  a  fixture  which  can  be  removed  by  the  tenant 
at  the  expiration  of  the  term. 

There  would  be  no  doubt  about  the  right  of  the  tenant 
to  remove  the  tracks  if  no  inconvenience  and  injury  to 
the  traveling  public  would  result.  {Wiggins  Ferry  Co. 
vs.  Ohio,  etc.,  R.  Co.,  142  V.  8.  396.) 


120 

The  injury  to  the  public  would  be  so  great  that  it  might 
well  be  held  that  the  street  railway  tracks  cannot  be  re- 
moved by  the  tenant;  but  it  is  certain,  that  the  tracks 
would  remain  the  property  of  the  street  railway  company, 
and  the  city  or  its  assigns  could  not  take  possession  of 
them.  Such  was  the  ruling  of  the  Supreme  Court  of  the 
United  States  in  Cleveland  Electric  Ry.  Co.,  vs.  Cleve- 
land, 204  U.  S.,  117-142. 

In  that  case  the  laws  of  Ohio  prohibited  municipalities 
from  making  street  grants  to  street  railway  companies 
for  a  longer  period  than  twenty-five  years,  and  the  court 
found  that  the  Garden  street  grant  expired  March  22, 
1905. 

January  11,  1904,  the  common  council  of  Cleveland 
had  made  a  grant  of  Garden  street  to  a  rival  company, 
known  as  the  Forest  City  Kailway  Company,  which  grant 
became  operative  March  22,  1905.  One  of  the  conditions 
of  the  grant  was  that  the  grantee  should  pay  to  the 
owners  of  the  tracks,  poles  and  the  other  property  being 
in  the  street,  an  amount  to  be  agreed  upon  therefor  or 
such   sum  as  should  be  finally  adjudicated  by  a  court. 

The  United  States  Circuit  Court  (137  Fed.  Ill),  held 
that  the  grant  made  to  the  rival  company  was  inoper- 
ative so  far  as  it  assumed  to  confer  any  legal  right  to 
take  the  tracks,  poles,  wires  and  appliances,  as  it  would 
be  the  taking  of  property  without  due  process  of  law. 

The  rival  company  was,  therefore,  enjoined  from  inter- 
fering with  the  complainant  in  the  peaceable  possession 
of  the  property  mentioned,  and  the  city  was  enjoined 
from  attempting  in  any  manner  to  put  the  rival  company 
into  possession  of  the  same. 

Both  parties  appealed  to  the  Supreme  Court  of  the 
United  States,  and  that  court  in  affirming  the  decree  be- 
low said: 


121 

''Upon  the  appeal  of  the  defendants,  we  think  little 
need  be  said.  The  defendants  insist  that,  upon  the  term- 
ination of  the  grant  to  the  Garden  street  branch,  the 
rails,  poles  and  other  appliances  for  operating  that  road, 
and  then  remaining  on  the  various  streets,  became  the 
property  of  the  city  or  at  least  that  the  city  had  the 
right  to  take  possession  of  the  streets  and  of  the  rails, 
tracks,  etc.,  therein  existing.  We  agree  with  the  court 
below  in  the  opinion  that  the  title  to  the  property  re- 
mains in  the  railroad  company  which  had  been  operating 
the  road,  and  we  are  of  opinion  that  The  Forest  City 
Railway  Company  had  no  rights  in  the  streets,  so  far  as 
affect  the  right  of  the  complainant  to  its  property  then 
existing  in  such  streets.  How  that  property  may  he  dis- 
posed of  is  not  noil-  a  mutter  before  this  court.  We 
only  hold  that  the  defendant  company  cannot  avail  itself 
of  tlie  provisions  of  the  ordinance  of  January  11,  1904, 
so  fas  as  taking  possession  of  the  property  of  the  com- 
plainant is  concerned."* 

Tliat  decision  left  the  Cleveland  Electric  Railway 
Company  in  possession  of  the  street  railway  on  Garden 
street  with  a  perpetual  injunction  enjoining  the  defend- 
ants from  taking  possession  of  the  property,  except  by 
some  due  process  of  law. 

It  is  evident  that  the  only  way  the  Cleveland  Electric 
could  have  been  dispossessed  was  by  condemnation  proceed- 
ings. If  the  defendants  had  no  authority  to  condemn 
street   railway   property   to   the   public   use  they   would 


'District  Judge  Tayler  in  the  court  below  held  that  the  Garden  street  grant  expired 
Mar.  22,  1905,  but  he  did  not  undertake  to  determine  what  the  rights  and  remedies 
of  the  parties  might  be,  if  the  City  undertook  to  dispossess  the  company;  and  in  the 
short  opinion  delivered  when  the  final  decree  was  entered  he  concluded  with  this 
significant   comment. 

"The  court  holds  that  the  Forest  City  Railway  Company  has  no  more  rights  in 
the  streets  than  the  complaijiant,  and  not  so  many,  because  the  complainant's  prop- 
erty is  there;  and  this  property,  if  removed  by  the  city,  must  be  removed  in  some 
way  that  coYresponds  wUh  the  properties  of  the  latv."  (Printed  Record,  p.  275,  in 
Supreme  Court  of  United  States  in  Cleveland  Electric  Ry.  Co.  vs.  City  of  Cleveland, 
204    U.   S.,  116. 


122 

Lave  had  to  wait  until  they  got  such  authority  from  the 
state  legislature,  under  the  power  to  amend,  alter  or  re- 
peal, as  in  Greenwood  vs.  Union  Freight  R.  R.  Co.,  105 
U.  8.  13. 

The  Cleveland  Electric  Railway  Company  was  engaged 
in  a  controversy  with  the  city  of  Cleveland,  concerning 
its  whole  system,  and  presumptively  for  tactical  reasons 
it  took  up  its  railway  tracks  on  Garden  street  and  re- 
moved its  poles  and  wires,  and  wholly  abandoned  the 
street,"  giving  the  city  complete  and  undisputed  control. 

In  a  subsequent  chapter  I  will  show  that  in  doing  this 
the  company  was  guilty  of  a  great  strategical  blunder. 

Again,  if  the  relation  of  landlord  and  tenant  exists, 
with  the  city  as  landlord  and  the  street  railway  company 
as  tenant,  both  are  subject  to  the  rule  of  law,  that  if  the 
tenant  holds  over  after  the  expiration  of  his  term,  the 
landlord  is  at  liberty  to  treat  him  as  a  trespasser  and 
by  a  proper  legal  proceeding  to  eject  him  from  the  prem- 
ises, or  he  can  recognize  the  tenancy,  by  accepting  rent, 
or  other  equivalent  action,  and  hold  the  tenant  for  an- 
other term,  at  the  same  rent,  and  the  other  conditions 
of  the  original  lease. 

In  this  view  of  the  case  the  two  per  cent  on  its  gross 
receipts,  the  Detroit  United  Railway  is  required  by  its 
contract  with  the  city,  to  pay  into  the  city  treasury 
semi-annuall}-,  must  be  regarded  as  rent,  and  if  the  city 
accepts  the  percentage  on  gross  receipts  after  November 
14,  1909,  it  wall  renew,  the  lease  for  another  term  of 
thirty  years,  on  the  old  terms  and  conditions. 

I  do  not  believe  that  any  such  consequence  would  re- 
sult from  an  acceptance  of  the  percentage,  but  it  would 
be  inevitable  if  the  relation  of  landlord  and  tenant  is 
held  to  exist. 


128 

The  fundamental  reason  why  a  street  grant  to  a  pub- 
lic utility  corporation  is  not  a  lease,  and  does  not  create 
a  tenancy,  is  that  the  city  has  no  private  ownership  of 
the  streets,  but  is  a  mere  trustee  for  the  general  public, 
and  its  control  of  the  streets,  is  for  the  purpose  of  im- 
I)roving  them  and  keeping  them  in  good  order  and  con- 
dition for  the  passage  of  persons  and  vehicles. 

The  actual  owner,  the  real  landlord  (if  there  is  one), 
is  the  general  public,  which  consists  of  the  vast  multitude 
and  concourse  of  persons  who  make  use  of  the  street 
railways.  Over  100,000,000  passengers  ride  on  the  De- 
troit street  railways  in  a  year.  A  rough  estimate  of  a 
1000  rides  per  year  for  each  family,  and  5  persons  a 
family,  shows  that  a  population  (including  visitors  from 
without  the  city)  of  500,000  persons  make  use  of  the 
street  cars  as  the  most  convenient  and  expenditious  way 
of  traveling  from  one  point  in  the  city  to  another. 

This  general  public  insists  on  a  continuation  of  the 
service,  and  its  action  in  continuing  after  November  14, 
1909,  to  ride  on  the  cars,  is  entitled  to  more  potency 
to  continue  the  tenancy  (if  there  is  one),  than  any  ac- 
tion the  common  council  may  take. 

There  are  three  parties  to  these  street  grants,  the 
municipality,  the  street  railway  company-,  and  the  state 
as  the  representative  of  the  general  public. 

The  state  authorizes  the  company  to  make  use  of  the 
streets  with  the  local  consent,  and.  that  consent  having 
been  once  given  it  can  not  be  withdrawn. 

The  state  permits  the  local  authorities  to  make  rules, 
regulations  and  conditions,  and  agreements  fixing  rates 
of  fare,  and  permits  the  local  autliorities  to  limit  the 
duration  of  the  same,  but  it  nowhere  permits  them  to 
limit  the  duration  of  the  consent  and  permission  granted. 


124 

Tlie  state  assumes  that  in  the  absence  of  lawful  local 
action,  its  own  general  laws  will  be  ample  to  protect  its 
own  beneficiary,  the  general  public. 

That  the  interests  of  the  public  prevent  a  street  grant 
for  a  term  of  years  from  being  considered  the  same  as 
a  lease  of  real  estate  between  private  parties,  is  abun- 
dantly settled  by  the  authorities. 

If  a  land  owner  should  rent  to  a  railroad  company  a 
strip  of  land  for  a  right  of  way,  and  the  ties  and  rails 
laid  thereon  became  a  component  part  of  the  railroad, 
the  landlord  could  not  at  the  expiration  of  the  term, 
maintain  ejectment  for  the  strip  of  land,  and  dispossess 
the  railroad  company;  nor  could  he  maintain  an  action 
of  trespass.  His '  only  remedy  would  be  an  action  for 
compensation. 

He  could  apply  for  an  injunction,  but  if  the  company 
had  the  power  of  condemnation,  the  injunction  would 
not  be  issued  pending  proceedings  to  condemn;  and  if 
the  company  did  not  have  the  power  of  condemnation 
the  injunction  would  » not  be  issued,  if  the  company 
promptly  paid  such  compensation  as  the  court,  by  a 
proper  proceeding,  determined  to  be  adequate. 

The  authorities  on  this  subject  were  reviewed  by  the 
Supreme  Court  of  the  United  States  in  an  instructive 
opinion  by  Mr.  Justice  Brewer,  in  the  interesting  case 
of  New  York  City  vs.  Pine,  185  U.  S.  93. 

In  that  case  the  city  of  New  York  had  no  power  to 
condemn  property  in  Connecticut,  which  was  being  dam- 
aged by  the  construction  by  the  city  of  a  water  works 
dam,  in  the  state  of  New  York,  on  a  river  which  flowed 
into  tlie  state  of  Connecticut  and  back  into  the  State  of 
New  York.  Connecticut  landowners  filed  a  bill  in  the 
Circuit  Court  of  the  United  States  for  the  Southern  Dis- 


125 

trict  of  New  York,  for  an  injunction  restraining  the  city 
from  maintaining  the  dam. 

The  CMrcuit  Court  susjjended  its  decrees  from  June  27, 
1900,  to  November  1,  1900,  to  enable  the  parties  to  come 
to  an  agreement ;  which  they  failed  to  do. 

Thereafter,  no  agreement  having  been  made,  a  decree 
was  entered  as  follows : 

"That  the  complainants  in  this  suit  and  each  of  them 
are  entitled  to  an  injunction  order  of  this  court  restrain- 
ing the  defendant,  its  successors  and  assigns,  their  and 
its  officers,  agents  and  employes,  each,  all  and  any  of 
them,  from  diverting  the  water  or  any  part  of  tlie 
water  of  the  West  Branch  of  the  Byram  River  or  any 
part  of  the  water  of  the  Byram  River,  or  in  preventing 
in  any  way  said  water  or  any  part  thereof  at  any  time 
from  flowing  through  its  natural  channel,  before,  at  and 
below  the  junction  of  the  two  branches  of  said  river;  and 

^'It  is  further  ordered,  adjudged  and  decreed  that  tlie 
defendant,  its  successors  and  assigns,  their  and  its  offi- 
cers, agents  and  employes,  each,  any  and  all  of  them,  be 
and  they  and  each  of  them  are  hereby  perpetually  en- 
joined from  diverting  the  water  or  any  part  of  the  water 
of  the  West  Branch  of  the  Byram  River,  or  any  part  of 
the  water  of  the  Byram  River,  or  in  preventing  in  any 
way  said  water  or  any  part  thereof  at  any  time  from 
flowing  through  its  natural  channel,  before,  at  and  be- 
low the  junction  of  the  two  branches  of  said  river." 

On  appeal  to  the  Circuit  Court  of  Appeals  for  the 
Second  Circuit  this  decree  was,  on  October  30,  1901,  af- 
firmed by  a  divided  court. 

On  a  review  of  the  case  by  the  Supreme  Court  of  the 
United    States,   that   court  took   into   consideration   the 


126 

general  subject,  but  coafined  its  actual  decision  to  the 
neglect  of  the  complainants  to  file  their  bill,  until  the 
dam  was  nearly  completed. 

The  opinion  of  the  court  concludes  as  follows: 

"On  that  ground  alone,  and  without  deciding  whether 
plaintiffs  have  a  legal  right  to  recover  damages,  the 
decrees  of  the  Circuit  Court  of  Appeals  and  the  Circuit 
Court  will  be  reversed  and  the  case  remanded  to  the  lat- 
ter court,  with  instructions  to  set  aside  its  decree  and  to 
enter  one  providing  for  an  ascertainment,  in  the  wav 
courts  of  equity  are  accustomed  to  proceed,  of  the  dam- 
ages, if  any,  which  the  plaintiffs  will  suffer  by  the  con- 
struction of  the  dam  and  the  appropriation  of  the  water, 
and  for  which  the  defendant  is  legally  responsible,  a 
proposition  upon  which  we  express  no  opinion,  and  fix- 
ing the  time  within  which  the  defendant  will  be  required 
to  pay  such  sum,  and  that  upon  the  failure  to  make  such 
payment  an  injunction  will  issue  as  prayed  for;  and,  on 
the  other  hand,  that  upon  payment,  a  decree  will  be 
entered  in  favor  of  the  defendant.  If  the  plaintiffs  shall 
prefer  to  have  their  damages  assessed  by  a  jury,  leave 
may  be  given  to  dismiss  the  bill  without  prejudice  to  an 
action  at  law." 

Justice  Brewer,  in  stating  the  case,  made  these  com- 
ments, which  are  directly  applicable  to  the  attitude  of 
the  city  of  Detroit  in  regard  to  the  expired  street  grants 
held  by  the  Detroit  United  Railway: 

"This  is  not  a  case  between  two  individuals  in  which 
is  involved  simply  the  pecuniary  interests  of  the  respec- 
tive parties.  On  the  one  side  are  two  individuals  claim- 
ing that  their  property  rights  are  infringed — rights  which 
ran  be  measured  in  money,  and  that  not  a  large  sum; 


127 

on  the  other,  a  municipality  undertaking  a  large  work 
with  a  view  of  supplying  many  of  its  citizens  with  one 
of  the  necessities  of  life.  According  to  the  averments 
in  the  bill  the  city  had  been  engaged  in  this  work,  and 
it  stands  as  an  admitted  fact  that  for  two  years  prior  to 
the  commencement  of  this  suit  the  work  had  been  under 
way.  It  is  true  the  testimony  discloses  that  the  plain- 
tiff and  the  city  had  been  trying  to  agree  upon  the 
amount  of  compensation,  but  that  shows  that  the  plain- 
tiffs were  seeking  compensation  for  the  injuries  they 
would  sustain,  and  were  not  insisting  upon  their  alleged 
right  to  an  abandonment  of  the  work.  It  is  one  thing  to 
state  a  right  and  proffet-  a  waiver  thereof  for  compensa- 
sation  and  an  entirely  different  thing  to  state  the  same 
right  and  demand  that  it  should  he  respected.  In  the 
latter  case  the  defendant  acts  at  his  peril.  In  the  former 
he  may  loell  assume  that  payment  of  a  just  compensation 
toill  he  accepted  in  lieu  of  the  right.  In  the  latter  the 
plo/intiff  holds  out  the  single  question  of  the  validity  and 
extent  of  the  right;  in  the  former  lie  presents  the  right 
as  the  foundation  of  a  claim  for  compensation,  and  his 
threat  to  enforce  the  right,  if  compensation  is  not  made 
is  simply  a  club  to  compel  payment  of  the  sum  he  deems 
the  measure  of  his  damages.  Further,  the  testimony 
shows  that  the  city  was  settling  with  other  parties  simi- 
larly situated,  and  paying  out  large  sums  of  money  for 
the  damages  such  parties  would  sustain.  So,  it  is  not 
strange  that  the  city  acted  on  the  assumption  that  the 
only  matter  to  be  determined  was  the  amount  of  the  com- 
pensation." 

"If  the  plaintiffs  had  intended  to  insist  upon  the  strict 
legal  rights  (which  for  the  purposes  of  this  case  we  as- 
sume they  possessed),  they  should  have  commenced  at 
once,  and  before  the  city  had  gone  to  expense,  to  re- 
strain any  work  by  it.     It  would  be  inequitable  to  per- 


IL'8 

mit  them  to  carry  on  negotiations  with  a  view  to  com- 
pensation until  the  city  had  gone  to  such  great  expense, 
and  then,  failing  to  agree  upon  the  compensation,  fall 
back  upon  the  alleged  absolute  right  to  prevent  the 
work.  If  they  had  intended  to  rest  upon  such  right  and 
had  commenced  proceedings  at  once,  the  city  might  have 
concluded  to  abandon  the  proposed  undertaking  and 
seek  its  water  supplies  in  some  other  direction.  If  this 
injunction  is  permitted  to  stand  the  city  must  pay  what- 
ever the  plaintiffs  see  fit  to  demand,  however  extortionate 
that  demand  may  be,  or  else  abandon  the  work  and  lose 
the  money  it  has  expended.  While  we  do  not  mean  to 
intimate  that  the  plaintiffs  would  make  an  extortionate 
demand,  we  do  hold  that  equity  will  not  place  them  in 
a  position  where  they  can  enforce  one." 

The  opinion  quotes  approvingly  from  the  opinion  of 
the  Supreme  Court  of  Georgia  in  Charleston  Railway  Co. 
vs.  Hughes,  105  Ga.  1,  where  Justice  Cobb  said: 

"When  a  railroad  company,  without  warrant  or  author- 
ity, enters  upon  the  land  of  another,  it  is  as  a  general  rule 
no  less  a  trespasser  than  any  other  person  who  is  guilty 
of  an  act  of  a  similar  nature.  If,  however,  a  railroad 
company  enters  upon  the  land  with  tlie  consent  of  the 
owner,  or  under  license  from  him,  the  property  thus 
taken. possession  of  becomes  such  a  necessary  component 
part  of  its  railroad  that  to  surrender  its  possession  would 
interfere  seriously  with  the  interests  of  the  company. 
The  landowner,  although  entitled  to  compensation  for 
his  property,  might  by  his  conduct  in  allowing  the  entr}' 
upon  his  land  and  permitting  the  company  to  so  use  it 
as  that  it  could  not  be  abandoned  without  great  preju- 
dice to  its  rights,  estop  himself  from  asserting  against 
the  company  the  legal  title  to  the  property  by  an  action 


129 

of  ejectment.     The  propositions  above  stated  are  simply 
the  application  of  familiar  principles  of  law  which  gov- 
ern  in  all  transactions  of  the  character  above  referred 
to,  whether  the  controversy  be  between  natural  persons 
alone,   or   between   such   persons   and   corporations,   and 
whether  the  corporation  be  public  or  private.     A  rail- 
road corporation,  being  one  charged  by  the  law  with  the 
performance  of  certain  duties  to  the  public,  is  allowed, 
under  some   circumstances,   to   set    up   rights   connected 
with  the  land  over  which  it  operates  its  line  or  railway, 
of  which  an  individual  or  an  ordinary  private  corpora- 
tion tcould  not  generally  be  allovyed  to  avail  itself.    Con- 
troversies in  reference  to  possession  of  land,  where  the 
rights  of  individuals  only  are  involved,  are  purely  mat- 
ters of  private  concern.     Controversies  in  which  a  cor- 
poration  charged  with   the  duties  incumbent   upon   car- 
riers of  passengers,  freight  and  mails,  in  which  an  effort 
is  made  by  private  individuals  or  others  to  take  away 
from  such  corporation  a  part  of  the  property  in  its  pos- 
session, which  is  absolutely  essential  to  its  complete  per- 
formance of  the  public  duties  required  of  it,  become  mat- 
ters of  more  than  private  conce"'n,  and  in  which  the  pub- 
lic is  deeply  and  seriously  interested.     For  this  reason 
it  has  become  settled  law  that  the  harsh  remedies  which 
would  be  allowed  to  one  individual  against  another  in 
reference  to  the  possession  of  land  unit  not  be  alloioed  to 
one  who  is  seeking  to  recover  such  property  from  a  rail- 
road company,  when  exact  justice  can  be  done  to  such 
owner  by  giving  him  remedies    .vhich  are  less  severe  in 
their  nature,  and  by  which  he  \rduld  secure  substantially 
the  same  rights,  thereby  saving  to  the  public  the  right 
to  require  a  performance  of  the  puhlic  duties  incumbent 
upon  the  corporation  whose  property  is  the  subject  mat- 
ter of  the  controversy.     That  a  railroad  corporation  has 
a  right  to  deprive  a  person  of  his  property  for  its  uses 


130 

bj'  doing  acts  which  in  an  individual  would  be  dealt 
with  as  a  trespass  is  not  contended  for;  but  when  a  rail- 
road company  enters  upon  land  and  constructs  its  road 
without  lawful  authority,  and  the  land  owner  acquiesces 
in  the  wrongful  act,  and  the  consequent  appropriation  of 
the  property  to  a  great  public  use  until  the  same  has  be- 
come a  necessary  component  part  of  the  property  re- 
quired by  the  railroad  to  perform  its  public  duties,  such 
land  owner  toill  be  held  to  have  waived  his  right  to  re- 
take the  property,  and  will  be  remitted  to  such  other 
remedies  for  the  wrong  done  him  as  will  not  interfere 
with  the  rights  of  the  public  to  have  the  railroad  main- 
tained and  operated." 

Such  is  the  law  everywhere. 

The  Supreme  Court  of  the  United  States  has  had  oc- 
casion to  examine  the  state  decisions  in  railroad  cases, 
and  to  fully  concur  in  the  views  expressed  by  the  Sup- 
reme Court  of  Georgia.  (Roberts  vs.  Northern  Pac.  R. 
R.  Co.,  158  U.  S.  1,  11;  Northern  Pac.  R.  R.  Go.  vs. 
Smith,  171  U.  S.  260;  Donohue  vs.  El  Paso,  etc.,  R.  R. 
Co.,2U  U.  S.  499.) 

The  state  decisions  cited  are  (Lexington  d  Ohio  Rail- 
road vs.  Ormsby,  7  Dam^  276;  Harlow  xs.  Marquette,  etc., 
Railroad,  41  Mich.  336 ;  CoAro  &  Fulton  Railroad  vs.  Tur- 
ner, 31  Ark.  494;  Pettibone  vs.  LaCrosse,  etc.,  R.  R.,  14 
Wis.  443;  Chicago  &  Alton  Railroad  vs.  Goodwin,  111 
III.  273;  McAuley  vs.  Weston,  etc.,  R.  R.,  33  Vt.  311; 
Provolt  vs.  Chicago,  etc.,  R.  R.,  37  Mo.  256;  Omaha,  etc., 
R.  R.  vs.  Redick,  16  Neb.  313;  Kanaga  vs.  Railway  Co., 
76  Mo.  207;  Dodd  vs.  St.  Louis,  etc.,  R.  R.,  108  Mo.  581; 
Eva/nsville,  etc.,  R.  R.  vs.  Nye,  113  Ind.  223. ) 


131 

The  Supreme  Court  of  the  United  States  (171  V.  S. 
273),  quotes  approvingly  from  the  opinion  of  Chief  Jus- 
tice Redfield,  in  tlie  Vermont  case.     (33  Vt.  311.) 

"In  these  great  public  works  the  shortest  period  of  clear 
acquiescence,  so  as  fairly  to  lead  the  company  to  infer  that 
the  party  intends  to  waive  his  claim  for  present  payment, 
will  be  held  to  conclude  the  right  to  assert  the  claim  in 
any  such  form  as  to  stop  the  company  in  the  pro- 
gress of  their  works,  and  especially  to  stop  the  running 
of  the  road  after  it  has  been  put  in  operation,  whereby 
the  public  acquire  an  important  interest  in  its  continu- 
ance. The  party  does  not,  of  course,  lose  his  claim  or 
the  right  to  enforce  it  in  all  proper  modes.  He  may  pos- 
sibly have  some  rights  analogous  to  the  vendor's  lien  in 
England,  and  here  until  the  legislature  cut  it  off.  But 
it  is  certain,  according  to  the  English  decisions,  that  he 
cannot  stop  the  work,  especially  the  trains  upon  the  road, 
if  he  has,  in  any  sense,  for  tlie  shortest  period,  clearly 
given  to  the  company,  either  by  his  express  consent,  or 
by  his  silence,  to  understand  that  he  did  not  intend  to 
object  to  their  proceeding  with  the  construction  and  oper- 
ation. *  ♦  »  If  there  was  then  a  waiver,  in  fact, 
either  express  or  implied,  by  acquiescence  in  the  proceed- 
ings of  the  company,  to  the  extent  of  not  insisting  upon 
payment  as  a  condition  precedent,  but  consenting  to  let 
tlie  damages  be  and  remain  a  mere  debt,  with  or  without 
a  lien  npon  the  roadt)ed,  as  the  law  may  turn  out  to  be, 
tlien  it  is  impossible  to  regard  the  defendants  in  any 
sense  in  the  light  of  trespassers  or  liable  in  ejectment." 

It  appears  from  the  foregoing  review  of  the  authorities 
that  a  trespass  committed  by  a  railroad  company  in  tak- 
ing possession  of  land  to  devote  it  to  a  public  use,  is 
judged  on  a  different  basis  than  a  trespass  committed  by 
a  private  party  for  his  own  private  purposes.     In  such  a 


132 

case  the  rightful  owner  is  entitled  to  regain  the  posession 
by  ejectment,  and  to  recover  his  damages.  In  the  case  of 
a  railroad  company  the  lawful  owner  is  not  entitled  to 
maintain  ejectment;  he  can  only  recover  compensation 
for  his  land  either  by  an  action  at  law,  or  by  a  bill  in 
equity  praying  for  an  injunction  and  other  relief. 

A  railroad  company  holding  possession  of  land  after 
the  term  for  which  it  was  demised  and  let  to  it,  is  cer- 
tainly in  a  more  favorable  position,  than  if  its  original 
entry  into  possession  was  wrongful;  and  it  follows  that 
a  railroad  company  when  it  holds  possession  of  land  be- 
yond the  term  of  its  lease,  cannot,  even  if  regarded  as  a 
trespasser,  be  ejected  by  any  process  known  to  the  law. 

This  doctrine  has  not  been  confined  to  actions  of  eject- 
ment and  bills  to  enjoin  the  further  operation  of  the 
railroad  over  the  property  trespassed  upon. 

At  the  common  law  improvements  made  by  one  upon 
the  land  of  another  without  his  consent,  even  if  made  in 
perfect  good  faith,  became  the  property  of  the  owner  of 
the  soil.  The  rule  of  the  civil  law  was  more  liberal  and 
allowed  one  who  had  made  the  improvements  on  land  in 
his  possession  under  the  bona  fide  belief  that  he  was  the 
owner  of  it,  to  exact  compensation  for  the  value  of  such 
improvements,  less  the  value  of  the  use  of  the  land,  before 
he  could  be  compelled  to  surrender  it. 

The  rigid  rule  of  the  common  law  has  been  somewhat 
modified  in  cases  where  the  improvements  were  made  in 
good  faith.  The  history  of  these  modifications  is  given 
by  Dillon,  J.,  in  Parsons  vs.  Moses,  16  la.  444. 

The  first  modification  was  by  the  court  of  chancery 
when  it  was  held  that  if  for  any  reason  the  real  owner 
was  compelled  to  seek  equitable  relief  he  would  be  re- 
quired to  pay  for  the  improvements  so  far  as  they  had 
permanently  enhanced  the  value  of  the  property. 


1S3 

Courts  of  law  next  modified  the  strict  rule  of  the  com- 
mon law  to  tliis  extent  that  where  the  real  owner  brought 
his  action  for  mesne  profits  the  bona  fide  occupant  might 
set  off  or  recoup  the  value  of  his  permanent  improve- 
ments to  the  extent  of  the  rents  and  profits,  but  no  fur- 
ther. 

Eventually  statutes  were  passed  in  all  or  nearly  all  the 
American  states  providing  that  the  unsuccessful  defend- 
ant in  ejectment  should  be  allowed  compensation  for  his 
improvements  provided  he  occupied  the  property  under 
color  of  title  and  in  good  faith,  or  his  possession  had  been 
so  long  continued  as  to  indicate  good  faith. 

These  statutes  were  found  to  be  subject  to  constitu- 
tional restrictions,  for  if  they  went  too  far  they  would 
violate  constitutional  guaranties.  (Childs  vs.  Shower, 
18  la.  261,  2%1 ;  Madlmid  vs.  Benland,  23  Minn.  372,  379 ; 
McCoy  vs.  Grandy,  3  Ohio  St.  463.) 

In  Indiana  the  courts  have  refused  to  apply  the  statute 
of  betterments  to  structures  wrongfully  placed  upon  the 
property  of  a  private  owner  by  a  railroad  company,  and 
in  subsequent  condemnation  proceedings  have  allowed  the 
property  owner  to  recover  the  value  of  the  improvements 
as  constituting  a  part  of  the  property  belonging  to  him. 
In  California  this  ruling  has  been  applied  to  a  lighthouse 
wrongfully  built  by  the  government  on  the  land  of  a  per- 
son without  his  consent.  And  in  New  York  it  has  been 
applied  to  a  reservoir  and  pipes  for  water  works  wTong- 
fully  constructed  by  a  village  on  private  property  before 
condemning  it  to  the  public  use.  (Graham  vs.  Conner- 
ville,  etc.  R.  R.  Co.,  36  Ind.  463;  United  States  vs.  Land 
in  Monterey  County,  47  Cal.  515;  St.  JohnsonviUe  vs. 
Smith,  184  N.  Y.  341.) 


134 

But  the  great  weight  of  authority  including  the  Michi- 
gan decisions  in  railroad  cases  are  the  other  way.  (Mor- 
gan's Appeal,  39  Mich.  675;  Toledo,  etc.  R.  R.  Co.  vs. 
Dunla/p,  47  Mich.  456;  Jiistice  vs.  Nesquehordng  R.  R. 
Co.,  87  Pa.  St.  28;  2  Lewis  on  Eminent  Domain  [Srd  Ed.) 
347,  ca.  ci.  n.  68.) 

The  Pennsylvania  case  has  been  approvingly  quoted 
from  by  the  Supreme  Court  of  the  United  States  (171 
V.  8.  273),  as  follows: 

"This  is  not  the  case  of  a  mere  trespass  by  one  having 
no  authority  to  enter,  but  of  one  representing  the  state 
herself  clothed  with  the  power  of  eminent  domain,  hav- 
ing a  right  to  enter,  and  to  place  these  materials  on 
the  land  taken  for  a  public  use — materials  essential  to 
the  very  purpose  which  the  state  has  declared  in  the 
grant  of  the  charter.  It  is  true  the  entry  was  a  trespass, 
by  reason  of  the  omission  to  do  an  act  required  for  the 
security  of  the  citizen,  to-wit,  to  make  compensation  or 
give  security  for  it.  For  this  injury  the  citizen  is 
entitled  to  redress.  But  his  redress  cannot  extend  be- 
yond his  injury.  It  cannot  extend  to  taking  the  personal 
chattels  of  the  railroad  company.  They  are  not  his  and 
cannot  increase  his  remedy.  The  injury  was  to  what 
the  landholder  had  himself,  not  to  what  he  had  not. 
Then  why  should  the  materials  laid  down  for  the  benefit 
of  the  public  be  treated  as  dedicated  to  him?  In  the 
case  of  a  common  trespasser  the  owner  of  the  land  may 
take  and  keep  his  structures,  nolens  volens,  but  it  is 
not  so  in  this  case;  for  though  the  original  entry  was  a 
trespass,  it  is  well  settled,  that  the  company  can  proceed, 
in  due  course  of  law,  to  appropriate  the  land,  and  conse- 
quently to  reclaim  and  avail  itself  of  the  structures  laid 
thereon." 


135 

The  only  reason  that  has  ever  been  advanced  for  mak- 
ing a  distinction  between  structures  wrongfully  built  by  a 
railroad  company  on  the  land  of  another,  and  structures 
built  by  a  private  trr  /passer,  is  the  public  nature  of  rail- 
road property,  and  the  power  jmssessed  by  railroad  com- 
panies to  condemn  property  to  the  public  use  on  the  pay- 
ment of  just  compensation. 

In  the  Dunlap  case  I  made  out  a  case  of  bad  faith  by 
showing  that  the  railroad  company  made  its  entry  under 
a  fraudulent  service  of  process.     (46  Mich.  190.) 

But  the  court  would  have  none  of  it ;  and  Judge  Camp- 
bell, speaking  for  the  court,  said  that  to  apply  the  rule  for 
which  I  contended  to  the  case  before  the  court  would  be 
absurd,  and  not  good  sense;  and  that  was  the  language  of 
a  judge  who  was  noted  for  the  tenacity  with  which  he 
upheld  private  rights. 

The  public  purposes  for  which  railroad  companies  are 
incorporated  adds  to  the  law  of  implied  contracts;  modi- 
fies the  law  of  landlord  and  tenant;  qualifies  the  law  gov- 
erning actions  of  trespass  and  ejectment;  limits  the  title 
of  private  owners  of  land,  to  less  than  they  would  pos- 
sess, as  against  private  trespassers;  and  liberalizes  the 
rule  of  strict  construction.  It  is  summed  up  in  the 
maiim :    "The  public  welfare  is  the  supreme  law." 

Comparing  this  principle  of  law,  which  we  have  found 
to  be  so  well  settled  with  the  case  of  the  Detroit  United 
Eailway,  we  are  taught  that  it  is  directly  applicable 
thereto. 

(1)  The  street  railway  property  of  the  company  has 
been  kept  in  as  good  condition  as  at  any  period  of  its 


136 

history,  up  to  the  very  last  day  of  the  expiring  local 
grants;  and  since  the  grants  expired  the  excellent  service 
the  company  renders  the  public  has  continued  undimin- 
ished and  impaired. 

(2)  The  city  of  Detroit  neither  before  or  since  Novem- 
ber 14,  1909,  has  given  any  notice  that  it  will  insist  on 
dispossessing  the  company  of  the  streets  covered  by  the 
expired  grants. 

(3)  The  tracks  on  the  streets  in  question  are  a  com- 
ponent part  of  street  railway  routes  which  are  of  much 
greater  length,  and  which  are  in  part  used  by  the  inter- 
urban  lines  of  the  company,  some  of  which  are  sixty  miles 
long  and  none  less  than  twenty  miles. 

(4)  Instead  of  taking  steps  to  eject  the  company  from 
the  portions  of  the  streets  in  question,  the  common  coun- 
sel of  the  city  has  passed  the  Hally  ordinance  of  March 
3,  1908,  and  the  Heineman  resolutions  of  October  19  and 
26,  1909,  and  the  Glinnan  resolution  of  December  14, 1909, 
set  forth  in  another  subdivision  of  this  brief,  thereby  put- 
ting the  city  into  a  position  where  it  is  forever  barred 
from  ousting  the  street  railway  company  from  the  streets. 

(5)  The  city  can  file  a  bill  in  equity  in  which  it  can 
allege  that  the  three-cent  fares  proposed  by  the  Hally  or- 
dinance and  the  Glinnan  resolution  are  reasonable  and 
sufficiently  remunerative  to  escape  being  confiscatory,  but 
it  can  not  get  any  injunction  or  other  process  to  dis- 
possess the  company,  if  the  company  can  show  and  the 
court  finds,  that  the  fares  proposed  are  not  reasonable. 

(6)  In  that  way  the  question  of  reasonableness  will 
become  a  judicial  question,  to  be  determined  by  the  courts 
of  justice  the  same  as  other  legal  controversies. 


137 

State  vs.  Cincinnati  Oas  Light  d  Coke  Co.,  IS  Ohio  »Sf, 
262  concerned  the  use  of  the  streets  of  the  city  by  a  gas 
company  under  a  contract  entered  into  in  1841  between 
the  city  and  James  F.  Conover  and  his  associates,  their 
heirs',  assigns  and  successors. 

At  page  291,  the  court  made  this  ruling : 

"We  tWnk  it  cannot  be  doubted,  that  the  right  to  use 
the  streets  of  a  city  for  the  purpose  of  laying  pipes  to 
convey  gas,  whether  in  the  hands  of  a  private  corporation 
or  a  natural  person,  is  a  franchise,  and  as  such  can  only 
emanate  directly  or  indirectly  from  the  sovereign  power 
of  the  state.  And  the  jwsition  that  the  city  council  of 
Cincinnati  in  making  the  contract  with  Conover  is  to  be 
regarded  as  a  private  corporation^  granting  an  easement 
in  its  own  property,  can  not  be  maintained.  In  one  sense 
and  to  a  certain  extent  the  streets  may  be  said  to  belong 
to  the  city.  But  as  highways,  the  public  have  an  interest 
in  them,  the  owners  of  adjoining  lots  have  a  special  prop- 
erty interest  in  them,  and  the  city  council  can  not  change 
the  character  of  the  public  use  to  which  they  may  have 
been  dedicated  by  the  original  proprietors.  Wherever  the 
statute  may  have,  from  time  to  time,  provided  that  the 
fee  in  the  streets  shall  be  considered  as  being  vested,  it  has 
always  declared  that  it  shall  be  so  vested  for  the  uses  of 
the  dedication.  Whatever  powers  of  supervision  and  con- 
trol the  legislature  may  have  conferred  upon  the  city 
council  for  the  purpose  of  rendering  the  enjoyment  of  the 
public  easement  or  use  more  convenient  an<J  beneficial,  or 
with  a  view  to  the  safety  health,  convenience,  or  comfort 
of  the  inhabitants  of  the  city,  these  powers  are  all  of  a 
public  municipal  character,  and  their  exercise  is  quite  dif- 
ferent from  the  acts  of  a  private  corporation  dealing,  at 
its  discretion,  with  property  over  which  it  may  cvcrrisc 
all  the  rights  incident  to  absolute  ownership." 


138 

It  appeared  in  above  case  that  in  1853  the  legislature 
gave  the  city  council  general  legislative  authority  to  fix 
the  price  of  gas  in  Cincinnati,  and  that  in  1854  the  city 
council  was  authorized  to  make  ten  year  contracts  with 
the  gas  company. 

The  couri^  at  page  299,  said : 

"The  act  of  1853  authorized  city  councils,  from  time  to 
time,  to  regulate,  by  ordinance,  the  price  at  which  gas 
companies  should  furnish  gas,  and  under  this  authority 
the  price  of  gas  might  be  changed  as  often  as  the  council 
might  think  proper.  The  act  of  1854  provided  a  mode  by 
which  stability  might  be  given  to  prices  for  a  period  not 
exceeding  ten  years,  and  gas  companies  be  secured  against 
any  change  of  price  to  their  prejudice  during  such  period. 
This  object  might  be  effected  by  an  ordinance  fixing  the 
price  for  a  definite  period,  which  should  have  the  effect 
of  a  contract,  when  assented  to  by  written  acceptance  of 
a  gas  company.  But  if  no  such  assent  were  given  by  the 
company,  the  ordinance  would  still  remain  valid  as  such, 
and  be  subject  to  modification  by  the  council  as  before. 
An  acceptance  by  the  company  would  bind  the  council  not 
to  lower  the  price  during  the  period  specified  in  the  ordi- 
nance, but  a  failure  to  accept  would  not  affect  the  valid- 
ity of  the  ordinance,  but  would  leave  the  council  free  and 
untrammeled  in  the  exercise  of  the  power  conferred  by 
the  act  of  1853." 

Further  on  at  page  301: 

"The  intention  of  the  legislature  in  the  30th  section  of 
that  act  was  to  require  incorporated  gas  companies,  over 
whose  charter  it  had  the  power  of  absolute  control,  to  dis- 
pose of  the  gas  which  they  might  furnish  for  public  or 
private  use,  at  fair  and  reasonable  prices.  As  such  prices 
might  vary,  with  change  of  times  and  locality,  the  act  pro- 
vides for  their  ascertainment  from  time  to  time,  throu«rh 


139 

the  agency  of  the  city  councils  of  the  cities  in  which  such 
companies  might  he  established.  The  discretionan-  power 
given  by  the  act  to  city  councils,  might  have  been  vested 
elsewhere,  but  wherever  vested,  the  gas  companies  whose 
property  interests  are  so  vitally  affected  by  it,  ha/ve  a 
right  to  demand  that  it  slmll  he  honestly  exercised  for  the 
purpose  for  which  it  was  given.  Suppose  the  purpose  and 
object  to  be  accomplished  by  the  passage  of  this  ordinance, 
as  alleged  in  the  rejoinder,  had  been  avowed  by  a  pre- 
amble, and  the  price  of  gas  had  been  fixed  by  its  pro- 
visions at  twenty-five  cents  per  thousand  cubic  feet,  could 
this  court  be  called  upon  to  declare  any  of  defendant's 
franchises  or  rights  forfeited  by  non-compliance  with  the 
requirements  of  such  an  ordinance?  Both  public  and  pri- 
vate rights  are  to  he  protected,  and  for  that  purpose  ice 
must  recognize  the  fact  that  a  rrmnicipal  as  well  as  a  pri- 
vate corporation  can  do  wrong." 


140 


VIII. 

The  correct  construction  of  the  Michigan  street 
railway  act  is,  that  the  "consent"  of  the  local  authori- 
ties, is  in  its  nature  perpetual;  that  the  local  authori- 
ties are  given  power  to  fix  the  rules,  regulations  and 
conditions  on  which  they  will  grant  their  consent  and 
to  agree  with  the  grantee  on  the  rates  of  fare,  and 
may  limit  the  duration  of  their  contract,  but  can  not 
put  a  time  limit  on  the  local  "consent;"  and  that  at 
the  expiration  of  any  period  of  time  agreed  upon, 
the  grantee,  its  successors  or  assigns,  may  continue 
to  occupy  the  streets,  subject  to  such  rules,  regula- 
tions and  conditions  and  rates  of  fare  as  the  law 
(in  the  absence  of  local  agreement)  imposes. 

Under  the  constitution  of  1850  the  legislature  could 
authorize  public  utility  corporations  to  make  use  of  the 
streets  without  requiring  the  consent  of  the  localities. 
This  was  done  in  the  case  of  telegraph  and  telephone  com- 
panies and  it  was  sustained  by  the  Supreme  Court. 
(Mich.  Telephone  Co.  vs.  St.  Joseph,  121  Mich.  502;  Mieh. 
Telephone  Co.  vs.  Benton  Harbor,  121  Mich.  512.) 

The  court  held  that  such  legislation  djd  not  deprive 
municipalities  of  their  police  powers,  and  while  they 
could  not  prohibit  the  erection  of  telegraph  and  telepli^ne 
jwles  along  their  streets,  they  could  adopt  and  enforce 
reasonable  regulations. 

Requiring  the  local  assent  in  the  case  of  street  rail- 
ways, gas  works,  and  some  other  public  utilities,  relates 
to  their  inception  and  original  location  in  the  streets; 
but  after  any  such  utility  has  been  once  located  and  con- 


141 

structed,  there  is  no  reason  why  a  further  consent  on  the 
part  of  the  municipality  should  be  necessary  to  authorize 
their  continued  existence  in  the  streets. 

Gas  and  water  mains  and  pipes  are  laid  deep  in  the 
ground,  and  the  cost  of  taking  them  out  would  be  more 
than  tlu^y  would  be  worth.  Is  it  possible  that  at  the  ex- 
piration of  the  local  contract,  gas  and  water  mains  and 
pil>es  would  be  regarded  in  law  as  dead  property,  of  no 
value  whatever,  at  the  will  of  the  local  authorities,  and 
the  entire  investment  therein,  a  total  loss. 

A  construction  of  the  street  railway  act  which  has  any 
such  result,  would  be  in  violation  of  all  the  rules  of  in- 
terpretation resorted  to  and  relied  upon  by  the  courts,  in 
their  efforts  to  ascertain  and  declare  the  true  meaning  of 
legislative  enactments. 

Giving  the  consent  of  the  municipality  and  designatinjj; 
the  streets  on  which  the  street  railway  is  to  be  con- 
structed, is  an  act  separate  and  distinct  from  that  of  fix- 
ing the  terms  and  conditions  of  the  grant.  The  one  is  the 
act  of  consenting  to  the  use  of  the  streets  named,  during 
the  corporate  life  of  the  grantee,  and  of  its  assigns  and 
successors,  and  the  other  is  the  act  of  fixing  the  terms 
and  conditions,  a  time  limitation  on  which  has  no  neces- 
sary connection  with  or  effect  on  the  consent,  as  that,  in 
its  nature  and  purpose,  is  designed  to  be  permanent  and 
perpetual. 

The  two  acts  on  the  part  of  the  municipality  might  well 
be  held  to  go  hand  in  hand,  and  to  be  inseparably  con- 
nected, like  the  Siamese  Twins,  if  at  the  expiration  of  the 
time  limit  placed  on  the  terms  and  conditions  and  rates 
of  fare,  no  rates  of  fare  or  terms  and  conditions  were 
to  exist,  and  the  street  railway  company  was  to  be  at  lib- 
erty to  do  as  it  pleased;  but  that  is  not  the  case,  as  the 
company  would  still  be  bound  by  such  rates  of  fare  and 


142 

other  terms  and  conditions  as  the  common  law  or  the 
statutory  law  of  the  state  imposes  upon  common  carriers. 

The  object  of  the  street  railway  addition  of  1861  to  the 
tram  railway  act  of  1855,  and  of  the  general  street  rail- 
way act  of  1867  was  not  to  hamper,  obstruct  or  impede, 
the  construction  of  street  railways;  nor  was  it  intended 
to  authorize  the  local  authorities  to  agree  to  terms  and 
conditions  and  rates  of  fare,  that  would  in  the  then  un- 
developed condition  of  the  street  railway  business,  be  ex- 
cessive and  unreasonable. 

The  correct  view  of  this  legislation  is  that  the  object 
sought  to  be  accomplished  was  to  give  the  local  authori- 
ties such  power  in  the  premises  as  would  enat>le  them  to 
hold  out  inducements,  and  to  make  such  permanent  ar- 
rangements for  such  period  of  time  as  might  be  agreed 
upon,  as  would  lead  private  capital  to  construct  and  oper- 
ate street  railways. 

To  illustrate:  Suppose  in  1862,  or  in  1879  it  had  been 
suggested  that  at  the  end  of  the  thirty  years,  the  city 
might  destroy  the  street  railway  in  either  one  of  two 
ways,  by  compelling  the  company  to  remove  from  the 
streets,  or  by  imposing  upon  it  such  low  rates  of  fare  or 
such  onerous  other  terms  and  conditions,  that  the  opera- 
tion of  the  street  railway  would  be  financially  unprofit- 
able, can  there  be  any  doubt,  as  I  have  hereinbefore  con- 
tended, but  that  the  city  would  have  promptly  agreed 
that  at  the  expiration  of  the  thirty  years  the  company 
should  be  entitled  to  continue  in  the  streets  on  reasonable 
terms  and  conditions  and  rates  of  fare  to  be  agreed  upon, 
or  to  be  adjudicated  upon  by  the  courts. 

All  I  contend  for  is  that  such  an  understanding  is  a 
fair  implication  if  any  consideration  whatever  is  to  be 
given  to  the  interests  and  rights  of  the  state  as  the  rep- 


143 

resentative  of  the  public  and  as  the  third  party  to  the 
contract. 

The  merit  of  this  construction  is  that  it  puts  an  end 
to  street  railway  wars  and  the  municipal  agitation  and 
disturbance  incident  thereto. 

An  intermittent  street  railway  war  has  prevailed  in 
Detroit  since  1891,  and  similar  strife  has  prevailed  in 
some  of  the  cities  of  Ohio  for  a  number  of  years.  I  will 
give  some  account  of  these  further  on. 

In  Detroit  and  Cleveland  the  strife  has  been  over  expir- 
ing grants  and  the  rates  of  fare  to  be  subsequently  im- 
posed. In  both  the  popular  cry  has  been  for  three-cent 
fares,  and  this  demand  has  been  steadily  resisted  by  the 
companies  concerned,  with  no  tribunal  and  no  means  of 
settling  the  dispute,  except  an  appeal  to  the  electors  of 
the  municipality,  who  constitute  the  constituency  of  the 
local  authorities,  thus  presenting  the  spectacle  of  one  of 
the  three  parties  to  the  controversy,  acting  as  the  final 
arbiter,  fuUy  clothed  with  the  authority  to  hear  the  case 
and  pass  judgment  on  its  own  cause. 

And  yet  we  are  told  this  is  the  law.  Could  anything  be 
more  absurd  or  unjust? 

If  my  construction  of  the  Michigan  statute  is  correct, 
when  a  local  contract  has  expired,  and  the  local  authori- 
ties and  the  company  can  not  agree  upon  a  renewal  or  a 
new  grant,  the  city  can  file  a  bill  to  have  it  determined  by 
the  court  whether  the  fares  charged  by  the  company  are 
reasonable,  with  a  certainty  that  both  of  the  parties  would 
be  given  a  full  and  fair  hearing,  and  that  equal  and  exact 
justice  would  be  done.  If  the  courts  in  this  country  do 
not  exist  for  such  a  purpose,  what  are  they  for?  They 
have  jurisdiction  of  all  kinds  of  controversies,  great  and 
small,  for  the  very  purpose  of  having  a  peaceful  metliod  of 
settling  the  rights  and  remedies  of  litigants;  and  it  is  a 


144 

time  honored  maxim  of  the  law  that  no  man  shall  be  the 
judge  of  his  own  case. 

The  only  answer  to  this  argument  so  far  suggested,  is 
that  the  electors  of  the  city  of  Detroit  will  decide  for 
themselves  what  the  rates  of  fare  shall  be,  and  that  they 
will  not  submit  to  the  interference  of  the  judges. 

While  it  is  true,  the  courts  have  no  jurisdiction  by  the 
exercise  of  either  legislative  or  executive  power,  to  fix 
rates  of  fare,  yet  they  have  undoubted  authority  to  det«*- 
mine  whether  a  rate  of  fare  fixed  by  a  legislature,^  a  city, 
or  by  a  street  railway  company  is  reasonable  or  not. 

The  common  council  of  the  city  of  Detroit  has  never 
been  given  any  legislative  power  to  fix  rates  of  fare.  The 
acts  of  the  legislature  limit  the  power  of  the  local  authori- 
ties to  the  making  of  mutual  agreements  with  street  rail- 
way corporations  concerning  the  rates  of  fare,  and  in  the 
absence  of  such  an  agreement,  a  street  railway  company 
can  fix  its  own  rates  of  fare,  but  subject  always  to  the 
power  of  the  courts  to  determine  on  the  facts  and  the  law, 
whether  the  rates  of  fare  charged  by  the  company  are 
reasonable  or  otherwise. 

All  statutory  construction  has  for  its  object  the  dis- 
covery of  the  intention  of  the  legislature.  If  the  statute 
is  valid,  the  intention  of  the  legislature  absolutely  con- 
trols. 

The  rule  of  strict  construction,  in  all  cases  where  it 
applies,  is  a  valuable  rule,  having  for  its  object^  in  the 
case  of  grants  of  power,  rights  or  privileges  to  either  pri- 
vate or  public  corporations,  the  protection  of  the  public 
interests. 

When  the  rule  would  result  in  injury  to  the  public,  it 
is  relaxed  and  a  more  liberal  construction  adopted.  In- 
deed, the  rights  and  interests  of  the  public,  affect  and 
modify  all  rules  of  construction. 


145 

The  Michigan  street  railway  laws  are  to  be  strictly  con- 
strued as  far  as  they  confer  power  either  on  the  street 
railw^ay  corporations  organized  under  them,  or  on  the 
local  authorities  of  cities,  villages  and  townships. 

These  municipalities  are  authorized  to  consent  to  the 
exercise  on  the  streets  designated  of  the  franchises  of  the 
company  to  which  a  grant  is  made,  and  to  agree  with  the 
company  on  the  rates  of  fare  and  other  terms  and  condi- 
tions. They  are  not  authorized  to  do  more,  and  any  at- 
tempt on  their  part  to  exercise  a  general  legislative  au- 
thority in  the  premises  would  be  without  authority  and 
illegal.  That  was  the  vital  p^^Int  in  the  case  of  Detroit 
vs.  Detroit  Citizens'  Street  Railway  Co.,  184  U.  8.  368, 
in  which  the  city  undertook  to  reduce  the  agreed  rates 
of  fare  hy  passing  an  ordinance  under  alleged  legislative 
power  to  do  so. 

The  expiration  of  an  agreement  fixing  the  rates  of  fare, 
does  not  increase  or  add  to  the  legislative  power  of  the 
municipality.  It  still  has  power  to  enter  into  an  agree- 
ment with  the  street  railway  company;  it  has  that  jwwer 
and  no  more  or  greater  authority. 

The  laws  of  the  state  are  not  changed  or  enlarged  by  the 
expiration  of  any  such  agreement;  they  remain  as  they 
were.  The  tracks  and  poles  and  wires  of  the  street  rail- 
way company  being  in  place  in  the  streets,  it  is  the  plain 
duty  of  the  company  to  continue  the  service,  and  a  cor- 
responding duty  rests  on  the  local  authorties,  to  permit 
the  service  to  continue,  as  they  have  no  authority  to  do 
anything  else;  and  are  powerless  except  to  negotiate  and 
enter  into  a  new  agreement. 

The  argument  that  this  would  be  giving  the  street  rail- 
way company  too  much  power,  as  by  refusing  to  make  a 
new  agreement,  it  would  practically  be  in  possession  of  a 
perpetual  franchise,  is  fallacious.    The  company  would  be 


146 

bound  to  observe  its  common  law  obligation  to  charge 
reasonable  fares  only,  and  whether  a  given  rate  of  fare  is 
reasonable  or  not  is  a  judicial  question,  easily  litigated 
and  adjudicated,  without  the  possibility  of  any  injustice 
or  wrong,  except  so  far  as  the  learned  judges  are  human 
beings,  and  possessed  of  human  weaknesses.  As  the  con- 
stitution of  Massachusetts  expresses  it,  "It  is  the  right 
of  every  citizen  to  be  tried  by  judges  as  free,  impartial 
and  independent  as  the  lot  of  humanity  will  admit." 

When  a  municipality  refuses,  or  for  any  reason  is  un- 
able to  make  a  contract  with  a  street  railway  company 
which  is  mutually  satisfactory,  and  assumes  to  dictate 
terms  and  decide  the  controversy  itself,  it  is  in  the  posi- 
tion of  a  judge  who  decides  his  own  case,  and  is  not  wil- 
ling to  have  it  adjudicated  by  an  independent,  disinter- 
ested and  impartial  tribunal. 

In  Kennedy  vs.  Gies,  25  Mich.  83,  the  Supreme  Court 
of  Michigan  ^had  occasion  to  construe  the  provision  of 
the  state  constitntion  of  1850  that  "The  board  of  super- 
visors or  in  the  county  of  Wayne,  the  board  of  county 
auditors  shall  have  the  exclusive  power  to  prescribe  and 
fix  the  compensation  for  all  services  rendered  for  and  to 
adjust  all  claims  against  their  respective  counties,  and 
the  sum  so  fixed  or  defined,  shall  be  subject  to  no  ap- 
peal." 

Tlie  question  presented  was  whether  the  board  of 
county  auditors  of  Wayne  County  had  a  right  to  fix  the 
amount  of  their  own  compensation.  The  opinion  of  the 
court  was  delivered  by  Judge  Christiancy,  who  was  dis- 
tinguished for  the  clearness  of  his  arguments  and  the 
force  of  his  logic. 

He  said : 

"As  the  services  of  the  county  auditors  are  'services 
performed  for  the  county,'  it  is  insisted  that  the  power 


147 

of  the  auditors  to  fix  the  compensation  for  their  own  ser- 
vices is  necessarily  included  under  this  provision.  And 
if  constitutions  and  statutes  were  always  to  be  con- 
strued like  mathematical  axioms,  this  reasoning  would 
be  very  conclusive,  since  the  whole  must  include  all  its 
parts;  and  'all  services  rendered  for  the  county,'  would 
necessarily  include  the  services  of  the  auditors,  so  far, 
at  least,  a&  they  were  performed  exclusively  for  the 
county.  But  in  legal  reasoning,  and  in  the  construction 
of  constitutions  and  statutes,  we  are  often  compelled  to 
content  ourselves  with  conclusions  somewhat  less  certain 
than  those  involved  in  mathematical  axioms;  because 
neither  conventions  nor  legislatures  always  use  language 
with  mathematical  accuracy,  and  neither  the  human 
mind  nor  human  affairs,  will  always  submit  to  merely 
mathematical  rule.  For  various  reasons,  and  upon  var- 
ious grounds,  exceptions  or  qualifications  are  sometimes 
implied,  though  not  expressed.  An  act  or  constitution 
which  should  give  to  justices  of  the  peace,  or  to  a  certain 
court,  the  right  to  try  all  cases  involving  certain  amounts, 
or  of  a  certain  character,  would  give  neither  the  justice 
nor  the  judge  the  right  to  try  his  own  cause,  or  give  final 
judgment  in  his  own  favor,  though  the  case  in  every  other 
respect  should  fall  within  the  class  he  was  expressly 
authorized  to  try.  An  exception  of  such  cases  would 
be  implied;  and  the  exception  would  be  just  as  valid  and 
just  as  readily  recognized  by  all  courts  as  if  it  had  been 
expressed.  I  do  not  mean  to  say  that  the  like  exception 
in  the  present  case,  if  any  can  be  implied,  is  as  clear 
as  in  the  instance  supposed.  I  use  the  illustration  now 
only  to  show  that  the  mathematical  argument  is  by  no 
means  necessarily  conclusive.  This  provision,  whatever 
may  be  the  proper  inference  from  it,  does  not  expressly 
declare  that  the  board  shall  have  the  right  to  fix  their 
own   compensation,   or  allow  their  own   claims,  as   has 


148 

generally,  if  not  always,  been  done  in  the  few  innstances 
of  minor  importance,  in  which  it  has  been  the  real  in- 
tention of  legislative  bodies  to  grant  such  a  power;  it 
does  not  expressly  refer  to  the  subject  of  their  compen- 
sation, or  their  claims,  and  it  is  entirely  legitimate  to 
inquire  whether  there  is  not  something  in  the  nature 
of  the  provision  itself,  considered  in  connection  with 
the  legislative  and  judicial  history  of  the  state,  and  the 
action  of  the  convention  which  framed  it,  which  may 
furnish  a  satisfactory  inference  that  such  an  exception 
was  intended,  and  should  therefore  be  implied  in  refer- 
ence to  the  services  and  claims  which  this  board  of  audi- 
tors were  empowered  to  fix  and  prescribe,  and  the  claims 
they  were  authorized  to  adjust,  as  would  be  implied  in 
case  of  power  given  to  judicial  officers,  in  the  instance 
already  mentioned. 

"As  to  the  nature  of  the  provision  itself,  if  it  is  to  be 
construed,  as  claimed  by  the  relator,  to  give  the  board 
the  pow^er,  exclusive  of  that  of  the  legislature,  to  fix  the 
amounts  to  be  allowed  to  all  officers,  for  services  to  be 
performed  for  the  county,  their  own  included,  and  to 
preclude  the  legislature  from  prescribing  the  fees  or 
salary  to  be  paid,  and  to  determine,  without  control  from 
the  legislature  or  the  courts,  all  claims  of  every  nature 
for  which  the  county  is  liable,  including  claims  in  their 
own  favor;  then,  it  gives  to  the  board  both  a  legislative 
and  a  judicial  power,  absolute,  and  unlimited,  upon  all 
questions  of  this  kind;  legislative,  in  prescribing  in  ad- 
vance the  rule  and  rate  of  compensation,  and  judicial,  in 
determining,  without  appeal  or  review,  the  just  and  rea- 
sonable compensation  for  any  service  for  the  county, 
though  performed  by  themselves,  for  which  they  have 
not,  in  their  legislative  capacity,  already  prescribed  a 
definite  compensation;  and  such  would  seem  to  be  the 


149 

nature  of  the  allowance  of  the  claim  of  fifty  dollars  to 
the  relator  in  the  present  case. 

"Now,  the  maxim,  that  no  man  shall  be  judge  in  his 
own  cause,  is  one  so  deeply  rooted  in  the  minds  of  the 
American  people,  and,  up  to  the  time  the  constitution 
was  adopted,  so  uniformly  applied  to  this  and  the  like 
boards,  that  to  give  them  this  power  of  final  adjudication 
upon  their  own  claims  and  of  fixing  the  amount  of  their 
own  compensation  without  appeal  or  review,  the  language 
should  be  so  clear  as  to  admit  of  no  other  reasonable 
construction." 

Judge  Campbell  said: 

"In  regard  to  the  power  of  the  county  auditors  over 
claims  generally,  I  think  the  language  of  the  constitu- 
tion is  so  much  broader  than  that  of  any  previous  statute 
as  to  give  them  legislative,  as  well  as  quasi  judicial, 
authority,  to  the  exclusion  of  any  other  interference. 

"But  I  agree  that,  in  regard  to  their  own  claims,  there 
is  such  an  incongruity  in  their  acting  on  both  sides,  and 
representing  adverse  interests,  that  there  should  be  an 
exclusion  of  the  power  asserted,  unless  clearly  given  be- 
yond mistake.  They  are  not  a  general  legislative  body, 
but  officers  acting  only  within  a  limited  sphere,  and  the 
general  common-law  disabilities  of  such  officers,  which 
would  exist  if  this  provision  were  statutory,  should  ap- 
ply as  well  to  constitutions  as  to  statutes,  so  long  as  they 
are  within  the  same  equity.  I  agree,  therefore,  in  the 
result  arrived  at  by  my  brethren." 

As  the  street  railway  act  of  1867  does  not  contain  a 
single  word  or  clause  expressly  authorizing  the  local 
authorities  to  put  a  time  limit  on  their  consent,  and  the 
act  itself  treats  the  consent  as  separate  and  distinct  from 
the  terms  and  conditions  and  the  rat^s  of  fare,  no  vio- 


150 

lence  is  done  to  the  act  by  construing  the  consent  as 
perpetual,  and  the  terms  and  conditions  and  rates  of 
fare,  as  subject  to  time  limitations. 

Sec.  14  of  the  act  reads : 

"After  any  city,  village  or  township  shall  have  con- 
sented, as  in  this  act  provided,  to  the  construction  and 
maintenance  of  any  street  railways  therein,  or  granted 
any  rights  and  privileges  to  any  such  company,  and  such 
consent  and  grant  have  been  accepted  by  the  company, 
such  township,  city  or  village  shall  not  revoke  such  con- 
sent, nor  deprive  the  company  of  the  rights  and  privileges 
so  conferred." 

It  is  one  thing  to  put  a  time  limit  on  the  terms  and 
conditons  and  the  rates  of  fare,  and  quite  another  thing 
to  put  a  time  limit  on  the  consent. 

Power  to  place  a  time  limit  on  the  one  may  be  fairly 
implied,  but  the  implication  should  not  be  carried  so  far 
as  to  authorize  a  time  limit  on  the  other.  The  consent 
is  so  connected  with,  and  has  such  a  relation  to,  the  fran- 
chise to  maintain  and  operate  as  to  preclude  any  time 
limitation  thereon. 

The  street  railway  act  of  1867  expressly  authorizes 
the  formation  of  corporations  "for  the  purpose  of  con- 
structing, owning,  maintaining  or  using  any  street  rail- 
way in  any  city,  village  or  township  in  this  state." 

The  state  grants  the  franchise  of  corporate  existence 
and  the  franchise  to  construct,  maintain  and  operate 
street  railways.  The  terms  and  conditions  and  the  rates 
of  fare,  and  the  designation  of  the  streets  on  which  the 
franchise  to  construct,  maintain  and  operate  is  to  be 
exercised,  are   left  to   be  fixed  by  agreement  with   the 


151 

local  authorities.     The  lapse  of  such  an  agreement,  can 
have  no  effect  on  the  franchise  granted  by  the  state. 

A  similar  grant  was  made  by  special  act  by  the  Wis- 
consin legislature,  to  the  Milwaukee  Gas  Light  Company. 
To  fix  the  terms  and  conditions  reference  was  made  to  a 
contract  between  the  city  of  Milwaukee  and  John  Lock- 
wood,  which  contract  was  for  the  term  of  fifteen  years; 
but  the  Supreme  Court  of  Wisconsin  held,  that  the  fran- 
chises granted  by  the  state  did  not  expire  with  the  fifteen 
years.  {State  vs.  Milwaukee  Gas  Light  Co.,  29  Wis. 
454.) 

A  Detroit  street  grant  to  a  gas  company  provided, 
that  "if  it  shall  at  any  time  enter  into  a  combination 
with  any  gas-light  company  concerning  rates  to  be 
charged  for  gas,  either  to  the  city  or  private  consumers, 
then  the  consent  given  by  this  ordinance  shall  cease  and 
this  ordinance  shall  become  null  and  void." 

Marston,  C.  J.,  held  that  an  agreement  between  two 
companies  dividing  the  city  between  them,  was  a  combin- 
ation concerning  prices;  but  he  then  said: 

"It  does  not,  however,  follow  that  the  city  can  have 
the  relief  prayed  for  in  this  case.  The  violation  of  such 
an  agreement  would  not  be  a  forfeiture  of  the  consent 
given  by  the  city,  nor  of  the  property  of  the  corporation 
acquired  thereunder.  This  would  be  a  measure  of  dam- 
ages for  the  violation  of  an  agreement  recognized  neither 
in  courts  of  law  nor  of  chancery." 

Cooley,  Graves  and  Campbell  concurred  in  result,  but 
did  not  agree  with  what  the  chief  justice  said  about  the 
division  of  territory  between  the  two  companies  being 
in  effect  a  combination  as  to  prices. 


152 

There  is  nothing  to  indicate  that  if  they  had  agreed 
with  the  chief  justice  about  the  division  of  territory,  they 
would  have  disagreed  with  him  in  what  he  said  in  the 
above  quotation. 

In  effect  the  court  held  that  the  clause  in  the  ordin- 
ance granting  the  consent  of  the  city,  providing  that  a 
combination  concerning  prices  should  work  a  termination 
of  the  consent,  was  void.  {Detroit  vs.  Mutual  Gas  Light 
Co.,  43  Mich.  594.) 

The  court  had  previously  held,  that  the  local  consent 
was  not  a  franchise,  but  a  mere  contract  or  license,  and 
therefore  quo  warranto  would  not  lie  to  determine 
whether  it  had  terminated.  {Mayhury  vs.  Mutual  Gas 
Light  Co.,  38  Mich.  154.) 

The  designation  of  the  streets  is  a  part  of  the  consent, 
and  the  streets  having  been  once  designated  and  occupied, 
there  is  no  occasion  for  another  designation,  and  no  occa- 
sion for  a  renewal  of  the  consent.  The  power  of  the 
local  authorities  as  to  these  has  been  exhausted,  and  the 
only  power  that  remains  to  them,  at  the  expiration  of 
any  term  agreed  upon,  is  to  come  to  another  agreement 
with  the  street  railway  company,  its  successors  or  as- 
signs. 

At  the  inception  of  a  street  railway  the  local  authori- 
ties have  an  undoubted  power  to  withhold  their  consent 
entirely,  and  to  impose  any  terms  and  conditions  and 
rates  of  fare  they  see  fit;  their  power  is  absolute;  but 
the  street  railway  company  is  under  no  obligation  to  ac- 
cept the  grant.  Both  of  the  parties  occupy  a  position 
of  independence. 

At  the  expiration  of  a  grant  for  a  limited  period,  the 
situation  has  changed.  The  street  railway  company  has 
its  property  in  place  in  the  streets  and  is  serving  the 


1»3 

public  to  the  extent  of  its  capacity.  To  remove  from  the 
streets  is  to  reduce  the  value  of  the  physical  property 
enormously,  and  to  deprive  the  company  of  its  business. 
This  is  not  a  position  of  independence,  if  the  company  is 
obliged  to  accept  the  terms  and  conditions  and  rates  of 
fare  demanded  by  the  local  authorities,  or  get  out  of  the 
streets.  The  one  course,  may  be  quite  as  destructive  as 
the  other. 

Ought  it  not  to  be  the  law,  that  the  local  authorities 
can  only  demand  reasonable  terms  and  conditions  and 
rates  of  fare,  and  that  the  street  railway  company  can 
not  insist  upon  any  thing  more? 

Who  is  to  decide  this  question  of  reasonableness?  Most 
assuredly  neither  of  the  parties  in  interest  I  Who  then? 
W^here  is  the  disinterested  and  impartial  tribunal,  with 
a  competency  of  jurisdiction,  to  decide  such  a  question 
and  such  a  case? 

It  is  a  case  where  the  state  ought  to  intervene. 

The  state  has  intervened ! 

(1)  The  state  has  accepted  and  adopted  the  common 
law  as  its  general  body  of  law. 

(2)  The  state  has  enacted  statutes  prescribing  and 
fixing  the  rights,  duties  and  powers  of  both  municipal 
and  street  railway  corporations,  which  laws,  if  rightly 
construed,  relegate  the  question  of  reasonableness  to  the 
judicial  department  of  the  government. 

(3)  The  state  has  established  an  elaborate  system  of 
courts,  of  legal  and  equitable  jurisdictions,  with  no 
limitation  except  that  the  courts  are  only  to  exercise 
their  jurisdiction  in  actual  legal  or  equitable  controver- 
sies duly  brought  before  them  by  the  parties  in  interest. 


154 

(4)  The  state  lias  created  an  executive  board  known 
as  the  Michigan  Railroad  Commission,  clothed  with  the 
authority  to  decide  in  the  first  instance,  whether  the  rates 
of  fare  and  freight  charged  by  common  carriers  are  rea- 
sonable or  not,  and  to  fix  such  rates  as  are  reasonable ; 
and  it  has  provided  that  any  party  feeling  aggrieved  by  any 
decision  and  order  of  the  commission,  may  have  the  same 
reviewed  by  the  circuit  court  in  chancery,  w^th  the  right 
of  appeal  to  the  supreme  court  of  the  state  as  in  other 
cases. 

Thus  it  appears  that  the  state  itself  has  vested  the  ul- 
timate power  to  decide  the  question  of  reasonableness  in 
its  own  judiciary. 

And  the  one  grand  object  and  purpose  of  the  state  is 
to  compel  persons  and  corporations,  both  public  and 
private,  who  seek  a  redress  of  grievances,  to  submit  them- 
selves to  the  arbitrators  and  judges  established  and 
maintained  by  the  state,  and  not  in  any  wise  whatsoever 
to  take  the  law  into  their  own  hands  and  to  redress  or 
avenge  their  own  wrongs.  Such  was  the  constant  prac- 
tice in  barbarous  times  and  is  still  the  practice  in  bar- 
barous nations, 

A  well  ordered  judicial  system  is  the  highest  evidence 
of  civilization. 

The  people  of  Michigan  are  not  barbarians. 


155 


IX. 

The  rule  that  public  grants  are  to  be  construed 
strictly,  in  favor  of  the  grantor  and  against  the 
grantee,  furnishes  abundant  proof  that  the  Detroit 
United  Railawy  has  a  right  to  continue  to  occupy 
the  streets  and  to  serve  the  public  beyond  the  period 
of  thirty  years. 

In  this  connection  it  must  be  remembered  that  there 
are  three  parties  to  the  contract:  (1)  the  state  as  repre- 
sentative of  the  general  public  (2)  the  street  railway 
company,  and  (3)  the  municipality;  and  that  the  in- 
terests and  rights  of  all  three  must  be  considered. 

Under  all  the  more  authoritative  decisions,  the  rule 
of  strict  construction  has  no  other  foundation  than  the 
protection  of  the  public  interests.  The  rule  recognizes 
an  inherent  weakness,  a  want  of  contractual  ability,  in 
all  public  bodies  and  functionaries,  and  the  courts,  with- 
in the  limits  of  the  judicial  power,  assume  to  act  as  the 
guardians  of  the  public  interests,  and  conservators  of 
the  public  rights. 

And  for  that  very  reason  when  the  public  interests  re- 
quire it,  the  rule  of  strict  construction  is  rejected  and  a 
more  liberal  construction  is  adopted. 

United  States  vs.  Denver  &  Rio  Grande  Railway  Co., 
150  JJ.  S.  1,  involved  the  construction  of  the  act  of  con- 
gress of  1875,  granting  rights  of  way  through  the  public 
lands  to  railroad  companies,  "with  the  right  to  take  from 
the  public  lands  adjacent  to  the  line  of  said  road,  ma- 
terial, earth,  stone,  and  timber  necessary  for  the  con- 
struction of  said  railroad." 


156 

If  the  act  was  given  a  narrow  construction,  the  timber 
taken  from  lands  adjacent  to  the  line  could  only  be  used 
for  construction  at  or  near  the  place  from  which  it  was 
taken,  but  if  given  a  liberal  construction  the  timber  could 
be  taken  and  used  at  remote  places  on  the  line  of  the 
railroad. 

The  court  in  an  opinion  by  Justice  Jackson,  said: 

"It  is  undoubtedly,  as  urged  by  the  plaintiffs  in  error, 
the  well  settled  rule  of  this  court  that  public  grants  are 
construed  strictly  against  the  grantees,  but  they  are 
not  to  be  so  construed  as  to  defeat  the  intent  of  the 
legislature,  or  to  withhold  what  was  given  either  ex- 
pressly or  by  necessary  or  fair  implication." 

After  quoting  from  the  opinion  of  the  court  by  Jus- 
tice Field  in  Winona  &  St.  Peter  Railroad  vs.  Barney, 
113  V.  S.  618,  625,  the  opinion  continues: 

"When  an  act,  operating  as  a  general  law,  and  mani- 
festing clearly  the  intention  of  congress  to  secure  public 
advantages,  or  to  subserve  the  public  interests  and  wel- 
fare by  means  of  benefits  more  or  less  valuable,  offers  to 
individuals  or  to  corporations  as  an  inducement  to  un- 
dertake and  accomplish  great  and  expensive  enterprises 
or  works  of  a  quasi  public  character  in  or  through  an 
immense  and  undeveloped  public  domain,  such  legislation 
stand?  upon  a  somewhat  different  footing  from  merely  a 
private  grant,  and  should  receive  at  the  hands  of  the 
court  a  more  liberal  construction  in  favor  of  the  purposes 
for  which  it  was  enacted.  {Bradley  vs.  New  York  &  New 
Haven  Railroad,  21  Connecticut,  294;  Pierce  on  Rail- 
roads, 491.) 

"This  is  the  rule,  we  think,  properly  applicable  to  the 
construction  of  the  act  of  1875,  rather  than  the  more 
strict  rule  of  construction  adopted  in  the  case  of  purely 
private  grants;  and  in  view  of  t^is  character  of  the  act, 


157 

we  are  of  opinion  that  the  benefits  intended  for  the  con- 
struction of  the  railroad  in  permiting  the  use  of  timber 
or  other  material,  should  be  extended  to  and  include  the 
structures  mentioned  in  the  act  as  a  part  of  such  rail- 
road." 

If  a  local  grant  is  to  be  strictly  construed,  it  must  be 
done  in  subordination  to  the  grants  of  power  by  the  legis- 
lature tiO  municipalities  and  street  railway  companies, 
which  are  also  to  be  strictly  construed.  It  would  be  a 
plain  contradiction  to  strictly  construe  a  grant  by  a 
municipality,  and  to  give  a  liberal  construction  to  a 
grant  of  jyower  to  it,  where  both  relate  to  the  same  sub- 
ject matter. 

In  making  a  street  grant  the  local  authorities  reserve 
all  power  and  rights  not  granted  expressly  or  by  necessary 
or  fair  implication;  but  that  does  not  enlarge  their  own 
power  as  that  is  also  subject  to  the  rule  that  the  legisla- 
ture reserves  all  power  not  granted  expressly  or  by  neces- 
sary or  fair  implication.  This  amounts  to  a  reservation 
of  power  by  the  municipality  coupled  with  a  reservation 
of  power  by  the  state. 

The  power  reserved  is  somewhere;  it  has  an  abiding 
place.  The  municipality  only  reserves  (on  a  strict  con- 
struction), so  much  of  the  power  Conferred  on  it  by  the 
state  as  the  municipality  does  not  grant,  and  the  state 
reserves  so  much  of  its  power,  as  is  not  granted  to  the 
municipality. 

The  state  is  the  source,  the  fountain  head,  of  all  the 
XK)wer  possessed  by  either  a  municipality  or  a  street  rail- 
way company,  and  the  public  objects  sought  to  be  accom- 
plished by  the  state,  have,  therefore,  a  controlling  in- 
fluence. 

The  state  expressly  grants  to  each  street  railway  com- 
pany, the  right  to  exist  as  a  corporation,  and  the  riglit  to 
maintain  and  operate  the  street  railways  constructcMl  l)v 


158 

it,  and  to  charge  tolls  or  fares  for  their  use  by  the  public. 
These  two  frauchises  are  separate  entities,  as  the  right  to 
operate  a  railroad  passes  to  the  purchaser  of  the  physical 
property  constituting  the  railroad,  but  the  franchise  of 
corporate  existence  does  not  pass.  {Memphis  R.  Co.  vs. 
Commissioners,  112  U.  S.  609;  New  Orleans,  etc.  R.  Co. 
vs.  Delamore,  114  U.  8.  501.) 

The  constitutions  of  New  York  of  1874  and  1894  con- 
tain this  provision: 

"But  no  law  shall  authorize  the  construction  or  opera- 
tion of  a  street  railroad  except  upon  the  condition  that 
the  consent  of  the  owners  of  one-half  in  value  of  the 
property  bounded  on,  and  the  consent  also  of  the  local 
authorities  having  the  control  of  that  portion  of  the  street 
or  highways  upon  which  it  is  proposed  to  construct  or 
operate  such  railroad  be  first  obtained,  or  in  case  the  con- 
sent of  such  property  owners  cannot  be  obtained,  the 
appellate  division  of  the  Stipreme  Court,  in  the  depart- 
ment in  which  it  is  proposed  to  be  constructed,  may,  upon 
application  appoint  three  commissioners  who  shall  deter- 
mine, after  a  hearing  of  all  parties  interested  whether 
such  railroad  ought  to  be  constructed  or  operated,  and 
their  determination,  confirmed  by  the  court,  may  be  taken 
in  lieu  of  the  consent  of  the  property  owners." 

Another  provision  provides  that  all  general  laws  and 
special  acts  for  the  creation  of  Qorporations,  may  be  al- 
tered from  time  to  time  or  repealed. 

In  1884  the  New  York  legislature  passed  a  general 
law  for  the  incorporation  of  surface'  street  railway  cor- 
porations. The  act  did  not  limit  the  duration  of  such 
corporations,  but  they  were  required  to  state  in  their  ar- 
ticles of  association  the  period  of  time  for  which  they 
were  organized.    The  provisions  relative  to  the  local  con- 


159 

sent  were   in   accord   with   the   constitutional   provision 
above  quoted. 

The  Broadway  Surface  Railroad  Company  was  organ- 
ized under  that  act.  Its  articles  of  incorporation  fixed 
the  duration  of  the  company  at  one  thousand  years.  Not 
being  able  to  obtain  the  consent  of  the  majority  in  value 
of  the  owners  of  the  property  bounded  on  the  street,  the 
company  obtained  the  appointment  of  commissioners  who 
reported  in  favor  of  the  construction  of  the  railroad,  and 
their  report  was  approved  by  the  appellate  division  of  the 
Supreme  Court. 

The  company  also  obtained  the  consent  of  the  local 
authorities  of  the  City  of  New  York.  This  was  done  by  a 
system  of  wholesale  bribery,  but  the  resolution  of  the 
common  council  was  never  attacked  on  the  ground  that 
it  w^as  obtained  by  fraud. 

The  legislature  of  the  state  took  other  means  to  undo 
the  work  of  Jacob  Sharp  and  his  associates  in  crime. 

The  l^slature  at  its  1886  session  first  passed  an  act 
providing  that  the  local  consent  for  the  use  of  the  streets 
by  street  railway  companies  should  be  sold  at  public  auc- 
tion to  the  bidder  who  would  give  the  largest  percentage 
of  its  gross  receipts  derived  from  the  operation  of  its 
railway,  which  should  not,  in  cities  of  250,000  population, 
be  less  than  three  per  cent  for  the  first  five  years,  and  five 
per  cent  thereafter.  The  legislature  expressly  reserved 
the  right  to  regulate  and  reduce  the  rate  of  fare.  (Laws 
of  1886,  Chap.  65,  p.  81.) 

The  legislature  then  passed  an  act  annulling  and  re- 
pealing the  charter  of  the  Broadway  Surface  Railroad 
Company.     (Id.  Chap.  268,  p.  443.) 

It  followed  this  with  an  act  that  when  a  surface  street 
railroad  company  shall  have  been  dissolved  or  annulled 
or  its  charter  repealed,  the  consent  of  the  local  aut.hori- 


160 

ties,  the  consent  of  the  property  owners,  and  the  order  of 
the  general  term  confirming  the  report  of  any  commis- 
sioner, shall  not  be  in  any  way  impaired,  revoked,  termin- 
ated or  otherwise  affected,  but  the  same  shall  be  sold  at 
public  auction  by  the  municipal  authorities  in  the  same 
manner  as  provided  by  the  previous  act.  (Id.  Chap.  271, 
p.  445.) 

A  little  later  an  act  was  passed  to  provide  for  the  wind- 
ing up  of  corporations  which  have  been  annulled  and  dis- 
solved by  legislative  enactment,  and  authorizing  the  at- 
torney general  of  the  state  to  bring  suit  for  that  purpose. 
The  receiver  authorized  to  be  appointed  was  given  au- 
thority to  pass  on  all  claims,  his  report  thereon  to  be  con- 
firmed by  the  court.     (Id.  Chap.  310,  p.  492.) 

All  this  legislation  was  passed  upon  by  the  New  York 
Court  of  Appeals,  in  People  vs.  O'Brien,  111  N.  Y.  1. 

It  was  held  that  the  repealing  act  was  valid;  that 
although  the  Broadway  Surface  Railroad  Company  was 
created  for  a  limited  period,  it  could  acquire  title  in  fee 
to  property  necessary  for  its  use;  that  the  gxant  in  this 
case,  not  being  limited  by  its  terms  was  in  perpetuity; 
that  the  tracks  of  a  railroad  company  and  the  franchise 
of  maintaining  and  operating  its  road  are  inseparable; 
and  that  the  acts  of  the  legislature.  Chap.  271  and  Chap. 
310,  were  unconstitutional  and  void. 

The  case  did  not  present  the  question,  whether  the  fran- 
chise to  maintain  and  operate  the  railroad,  would  termin- 
ate at  the  expiration  of  a  limited  period,  if  the  local  con- 
sent had  been  made  with  such  a  limitation.  The  case  is, 
therefore,  without  authority  on  that  question. 

I  cite  the  case  as  an  authority  where  it  was  held  that 
the  franchise  to  maintain  and  operate  is  connected  with 
the  physical  property,  and  is  not  lost  by  the  dissolution 
of  the  company,  resulting  from  a  l^islative  repeal  of  its 
charter. 


161 


X. 

Recent  street  railway  history  in  Ohio  shows  the 
necessity  of  avoiding  similar  conditions  in  Michigan. 

In  the  VII  subdivision  of  this  brief  the  decision  of  the 
Supreme  Court  of  the  United  States  in  Cleveland  Electric 
Ry.  Go.  vs.  Cleveland,  204  U.  S.  117,  is  considered  and  the 
opinion  expressed  that  the  street  railway  company,  when 
it  removed  its  tracks,  poles  and  wires  from  Garden  street, 
was  guilty  of  a  great  strategical  blunder. 

The  Garden  street  line  had  been  in  operation  for  thirty- 
seven  years.  It  was  originally  built  under  an  ordinance 
adopted  January  14,  1868,  which  limited  the  duration  of 
the  grant  to  twenty  years;  but  by  an  ordinance  adopted 
March  22,  1880,  the  grant  was  extended  for  twenty-five 
years  from  that  date,  and  hence  expired  March  22,  1905. 

Large  residence  and  business  districts  tributary  to 
Garden  street  had  been  built  up  in  reliance  on  the  street 
railway,  and  the  company  in  abandoning  the  street,  vio- 
lated its  duty  and  obligations  to  the  public,  without  any 
advantage  to  itself.  The  ties,  rails,  poles  and  wires  re- 
pioved  from  the  street  had  only  a  second  hand  value,  less 
the  cost  of  removal.  The  original  cost  of  placing  them  in 
the  street  was  wholly  lost.  While  in  the  street,  and  in 
actual  use,  the  tracks  and  overhead  works,  were  worth  as 
much  as  it  would  cost  to  replace  them,  less  the  depreci- 
ation due  to  their  age  and  the  extent  to  which  they  were 
worn.  In  any  condemnation  proceedings,  or  other  adjust- 
ment the  city  or  the  rival  street  railway  company  would 
have  been  required  to  pay  a  just  compensation  for  the 
property  as  it  was,  and  not  as  junk. 


162 

The  actual  loss  sustained  by  the  Cleveland  Electric  in 
removing  its  railway  from  the  street  must  have  been  very 
large,  conservatively  estimated  at  |250,000,  and  it  lost 
possession  of  the  street. 

About  41/^  miles  of  double  track,  which  had  been  rebuilt 
with  concrete  foundations  three  or  four  years  before,  were 
taken  up.  The  rails  and  ties  were  removed,  and  the 
mutilated  street  was  repaved  and  put  in  good  condition. 
The  service  was  stopped  on  the  23rd  day  of  April,  1907, 
and  the  work  of  digging  up  the  tracks,  and  removing  the 
poles  and  wire  was  commenced  on  April  29,  1907.  The 
work  of  removal  and  repaving  was  completed  in  thirty 
days. 

A  controversy  arose  over  the  making  of  a  new  grant, 
but  eventually  a  rival  company,  known  as  the  Neutral 
Street  Railway  Company,  obtained  such  a  grant  and  re- 
built the  road.  Use  was  made  of  the  concrete  foundations 
and  paving  material  left  in  the  street,  and  the  actual  cost 
of  rebuilding  was  about  |200,000. 

But  the  greatest  loss  was  sustained  by  the  puWic.  Street 
railway  service  on  the  line  was  not  resumed  until  June  8, 
1908.  A  x>opulation  tliat  had  had  a  street  railway  service 
for  thirty-seven  years  was  deprived  of  it  for  over  thirteen 
months. 

The  Garden  street  tracks  connected  with  those  on  Pros^ 
pect  street  at  or  in  the  vicinity  of  Ninth  street,  and  they 
ran  out  on  Garden  street,  now  Central  avenue,  to  Eighty- 
Third  street.  A  branch  line  started  at  Fifty-fifth  street, 
and  ran  out  Quincy  street  to  the  Woodhills  road,  which 
is  the  next  street  beyond  One  Hundred  and  Fifth  street. 

The  nearest  street  car  line  on  the  north  was  tlie  Cedar 
avenue  line,  and.  the  nearest  line  on  the  south  was  the 
Seovill  street  and  Woodland  avenue  line.  Between  these 
two  lines  on  the  north  and  south  was  located  a  dense  x>op- 


163 

ulation  which  was  served  by  the  Garden  street  line  and  its 
Qnincy  street  branch.  This  i)art  of  Cleveland  is  not  oc- 
cupied by  the  wealthy/ but  by  a  plain  and  common  people, 
much  more  in  need  of  adequate  street  railway  service. 
They  were  put  to  great  inconvenience  and  much  actual 
loss,  especially  in  the  depreciation  of  the  rental  and  sale- 
able value  of  property. 

It  would  be  difficult  to  estimate  in  dollars  and  cents  the 
total  actual  loss  these  i)eople  sustained,  but  it  was  very 
large,  and  the  whole  proceeding  can  only  be  character- 
ized as  an  outrage,  chargeable  to  the  Cleveland  Electric 
Railway  Company  and  the  corporation  known  as  the  City 
of  Cleveland. 

Here  we  have  a  specimen  of  the  results  of  the  landlord 
and  tenant  theory  of  street  grants  to  public  utility  cor- 
porations. 

The  constitution  and  laws  of  Ohio  are  supposed  to 
sanction  and  require  just  such  a  wanton  destruction  of 
property,  and  public  inconvenience  and  injury,  whenever 
a  public  utility  corporation  and  the  municipality  in  which 
it  is  located,  are  not  able  to  agree  on  terms  for  a  renewal 
grant. 

I  do  not  believe  the  laws  of  Ohio,  rightly  construed,  re- 
quire any  such  unwise  and  impolitic  interpretation,  but 
the  decisions  of  the  courts  in  that  state  seem  to  support 
that  view. 

Rev.  Stat,  of  Ohio  of  1880,  contain  the  following  sec- 
tions: 

Sec.  2501.  No  corporation,  individual,  or  individuals 
shall  perform  any  work  in  the  construction  of  a  street 
railroad  until  application  for  leave  is  made  to  the  council, 
in  writing,  and  council,  by  ordinance,  shall  have  granted 
permission,  and  prescribed  the  terms  and  conditions  upon, 
and  the  manner  in  which  the  road  shall  be  constructed  and 


164 

operated,  and  the  streets  and  alleys  which  shall  be  useil 
and  occupied  therefor,  and  cities  of  the  first  and  second 
grades  of  the  first  class  may  renew  any  such  o^ant  at  its 
expiration  upon  such  conditions  as  may  be  considered 
conducive  to  the  public  interests. 

Sec.  2502.  No  ordinance  for  such  purpose  shall  be 
pas^d  until  public  notice  of  the  application  therefor  has 
been  given  by  the  clerk  of  the  corporation,  in  one  or  more 
of  the  daily  papers,  if  there  be  such,  and  if  not,  then  in 
one  or  more  of  the  weekly  papers  published  in  the  cor- 
poration for  the  period  of  three  successive  weeks,  and  no 
such  grant  shall  be  made  except  to  the  corporation,  in- 
dividual, or  individuals  that  will  agiee  to  carry  passen- 
gers upon  such  proposed  railroad  at  the  lowest  rates  of 
fare,  and  shall  have  previously  obtained  the  written  con- 
sent of  a  majority  of  the  property  holders  on  the  line  of 
the  proposed  street  railroad,  represented  by  the  feet  front 
of  lots  abutting  on  the  street  along  which  such  road  is 
proposed  to  be  constructed;  provided  that  no  grant,  nor 
renewal  of  any  grant  for  the  construction  or  operation  of 
any  street  railroad  shall  be  valid  for  a  greater  period  than 
twenty-five  years  from  the  date  of  such  grant  or  renewal ; 
and  after  such  grant  or  renewal  of  a  grant  is  made, 
whether  by  special  or  general  ordinance,  the  municipal 
corporation  shall  not,  during  the  term  of  such  grant  or 
renewal,  release  the  grantee  from  any  obligation  or  lia- 
bility Imposed  by  the  terms  of  such  grant  or  renewal  -of  a 
grant. 

The  above  sections  without  any  change  material  to  this 
discussion  are  still  in  force.  (1  Bates  Anno.  Ohio  Stat., 
eth  Ed.,  Sees.  1536-184,  1536-185.) 

These  statutory  provisions  absolutely  prohibit  local 
street  grants  for  more  than  twenty-five  years,  but  it  was 


165 

not  the  intention  of  the  Ohio  legislature  that  street  rail- 
ways huilt  under  such  grants  should  be  ripped  up  and 
destroyed  at  the  end  of  the  term  agreed  upon,  for  ample 
provision  is  made  for  renewals  without  a  reletting  to  the 
corporation  or  person  who  will  on  advertised  proposals, 
bid  the  lowest  rates  of  fare.  Municipalities  are  author- 
ized to  "renew  any  such  grant  at  its  expiration  ux>on  such 
conditions  as  may  be  considered  conducive  to  the  public 
interests." 

These  words  recognize  the  public  rights  as  paramount; 
they  do  not  authorize  "conditions,"  antagonistic  to  the 
public  interests;  nor  were  they  intended  to  confer  any  ab- 
solute power  to  destroy  a  valuable  property  devoted  to 
the  public  use,  by  a  capricious  refusal  to  grant  a  renewal. 

The  courts  have  no  power  to  compel  renewals  or  to  fix 
their  terms  and  conditions,  but  they  have  control  of  the 
remedies,  which  a  municipality  must  resort  to  in  order  to 
dispossess  the  company  in  possession.  The  only  remedy 
open  to  a  municipality  would  be  a  bill  of  complaint  in  a 
court  having  the  powers  of  a  court  of  equity,  praying  for 
an  injunction  to  enjoin  the  company  from  continuing  the 
operation  of  the  street  railway,  but  no  court  would  grant 
such  an  injunction,  if  it  would  result  in  great  public  in- 
convenience and  injury,  and  the  attitude  of  the  municipal 
authorities  was  capricious  and  wanton. 

Such  an  injunction  was  granted  by  the  Superior  Court 
of  Cincinnati,  in  the  case  of  Citt/  of  Cincinnati  vs.  Cincin- 
nati Inclined  Plane  Ry.  Co.,  30  Ohio  Wkhj.  Laic  Bui.,  321 ; 
but  on  the  suggestion  of  the  corporation  counsel  the  issu- 
ing of  the  writ  was  deferred  for  six  months  to  enable  the 
company  to  apply  to  the  city  authorities  for  a  new  grant. 
The  case  was  appealed  to  the  Supreme  Court  of  Ohio, 
where  October  23,  18^4,  the  judgment  below  was  affirmed 
for  the  reasons  stated  in  the  opinion  of  the  court  below, 


166 

52  Ohio  St.  609.  The  opinion  of  the  superior  court  is  not 
in  the  state  report,  hut  will  he  found  in  the  report  of  the 
case,  44  N.  E,  327. 

The  Louisville  Trust  Company  held  a  mortgage  on  the 
property  of  the  Cincinnati  Inclined  Plane  Ry.  Co.,  and  as 
it  was  not  a  party  to  the  suit  in  the  state  courts,  it  was 
not  hound  by  the  judgment  therein. 

The  Louisville  Trust  Company  filed  a  hill  in  the  United 
States  Circuit  Court  under  which  the  case  decided  hy  the 
state  courts  was  re-litigated.  District  Judge  Sage  held 
that  the  decision  of  the  state  Supreme  Court  was  con- 
clusive, and  binding  on  the  federal  courts,  and  dismissed 
the  bill,  73  Fed.  716.  The  Louisville  Trust  Company  ap- 
pealed to  the  United  States  Circuit  Court  of  Appeals  for 
the  sixth  circuit,  where  the  case  was  heard  hy  Lurton  and 
Taft,  Circuit  Judges,  and  Hammond,  District  Judge.  76 
Fed.  296. 

In  the  meantime  the  Louisville  Trust  Company  filed  a 
bill  in  the  United  States  Circuit  Court  to  foreclose  its 
mortgage  on  the  property  of  the  Cincinnati  Inclined 
Plane  Railway  Company  and  obtained  the  appointment  of 
a  receiver,  who  was  in  possession  of  the  property,  and 
operating  the  street  railways  when  the  case  was  heard  in 
the  Court  of  Appeals.  That  court  in  an  opinion  by  Judge 
Lurton  disagreed  with  the  state  courts  and  with  Judge 
Sage  in  some  particulars,  and  agreed  with  them  in  others ; 
that  is,  in  effect  it  modified  the  decree  of  the  state  courts. 
The  decree  of  Judge  Sage  was  reversed  and  the  case  re- 
manded for  such  further  orders  and  decrees  not  inconsist- 
ent with  the  views  expressed  in  the  opinion  of  the  Court 
of  Appeals.  The  city  of  Cincinnati  then  filed  an  inter- 
vening petition  in  the  foreclosure  suit  pending  in  the 
United  States  Circuit  Court,  and  in  which  petition  it 
prayed  that  an  order  be  made  directing  the  receiver  to 


167   . 

cease  from  holding  possession  of  the  streets  in  question, 
and  from  using  said  streets,  and  from  maintaining  and 
operating  the  street  railway  thereon,  and  directing  the 
receiver  to  surrender  full  possession  of  the  streets  to  the 
city  of  Cincinnati. 

The  Louisville  Trust  Company  filed  an  answer  to  the 
intervening  petition  and  showed,  among  other  things,  that 
on  December  14,  1896,  it  applied  in  good  faith  to  the  leg- 
islative body  of  the  city,  for  renewal  grants,  and  that  on 
the  19th  day  of  December,  1896,  it  obtained  an  order  of 
the  Superior  Court,  suspending  the  writ  of  injunction 
granted  by  that  court  for  six  months,  with  leave  to  fur- 
ther apply,  and  a  copy  of  the  order  of  the  court  and  of 
the  opinion  of  Judge  Smith,  granting  the  same,  was  made 
a  part  of  the  answer. 

The  hearing  on  the  intervening  petition  and  the  answer 
thereto  was  heard  in  the  Circuit  Court,  before  Taft,  Cir- 
cuit Judge,  who  was  one  of  the  judges  who  had  heard  and 
decided  the  other  case  in  the  Court  of  Appeals.  Judge 
Taft's  decision  on  the  intervening  petition  is  reported  in 
78  Fed.  307.  It  was  rendered  January  4,  1907,  before 
the  six  month'  suspension  of  the  writ  of  injunction  en- 
joining the  company  from  operating  on  the  streets  in 
question,  had  expired. 

Judge  Taft,  now  president  of  the  United  States,  and 
equally  distinguished  as  a  jurist  and  a  diplomatist,  in  dis- 
posing of  the  case,  was  confronted  with  the  fact  that  all 
of  the  courts  had  agreed  that  some  of  the  grants  under 
which  the  street  railway  company  occupied  sti'eets  or 
parts  of  streets  had  expired  and  the  city  was  entitled  to 
dispossess  the  company. 

In  view  of  the  fact  that  the  Superior  Court  had  sus- 
pended the  issuing  of  its  injunction,  to  enable  the  street 


•  168 

railway  company  to  negotiate  renewal  grants,  and  sucli 
negotiations  were  then  being  conducted,  Judge  Taft  de- 
clined to  grant  the  intervening  petition  of  the  city.  He 
said : 

"Negotiations  have  heen  opened  by  the  inclined  plane 
company  with  the  board  of  legislation  of  the  city,  looking 
to  the  renewal  of  former  grants.  The  Superior  Court, 
which  in  1893  granted  a  perpetual  injunction  against  the 
use  by  the  inclined  plane  company  of  the  invalid  part  of 
its  line  as  a  street  railway,  has -suspended  the  operation 
of  its  injunction  for  six  months  from  December  11,  1896, 
to  permit  such  a  negotiation. 

"The  vigor  of  Judge  Smith's  language  in  granting  the 
suspension  leaves  no  room  to  doubt  that  in  his  judgment 
the  situation  of  the  parties  justifies  him  in  withholding 
his  hand,  as  chancellor,  in  the  enforcement  of  the  decree, 
until  a  full  opportunity  is  given  to  the  inclined  plane 
company  to  obtain,  if  possible,  new  concessions  from  the 
city.  I  concur  with  Judge  Smith  in  this  view,  and  do  not 
think  that  the  time  allowed  is  unreasonable,  when  one 

considers  the  somewhat  slow  movements  of  a  municipal 
legislature.  It  is  urged  upon  the  court  that  such  an  af- 
firmative order  of  the  kind  here  prayed  for  was  made 
upon  a  receiver  in  the  case  of  Felton  vs.  Ackerman,  22 
U.  8.  App.  154,  9  C.  C.  A.  457,  and  61  Fed.  225.  The 
circumstances  of  that  case  were  very  different.  There  the 
receiver,  while  operating  a  railroad,  erected  a  fence  across 
a  public  highway,  under  a  void  order  of  a  road  commis- 
sioner. He  was  required  by  the  court  to  undo  the  wrong 
he  had  unwittingly  done.  It  was  no  sacrifice  of  the  prop- 
erty in  his  charge.  The  fence  reduced  the  number  of  rail- 
way crossings  by  one,  and  to  that  extent  lessened  the  dan- 
ger of  crossing  accidents,  but  it-s  removal  caused  but  a 
slight  change  in  the  receiver's  situation,  or  that  of  the 
railway  company's  line  which  he  was  operating.     So  far 


169 

as  the  petition  of  the  city  asks  for  aflarmative  relief  against 
the  inclined  plane  company  and  the  trust  company  in  the 
form  of  an  order  for  the  removal  of  tracks,  poles,  wires, 
bridges  and  buildings,  it  is  denied." 

The  denial  of  the  city's  petition  did  not,  in  Judge  Taft's 
judgment  dispose  of  the  whole  case  made  by  that  x)etition. 
The  court  was  in  possession  of  the  whole  line  of  railway, 
valid  and  invalid,  and  the  city  could  pursue  no  remedy 
for  the  enforcement  of  its  rights  except  by  leave'  of  the 
court;  and  Judge  Taft  thought  that  barrier  ought  in  some 
way  to  be  removed.  Counsel  for  the  street  railway  com- 
pany had  urged  four  different  reasons  to  the  contrary,  all 
of  which  were  taken  into  consideration.  His  comments 
on  the  second  reason  advanced  by  counsel,  were  as  fol- 
lows: 

"2.  Nor  do  I  think  that  the  other  proposition  that  the 
city  may  not  oust  the  inclined  plane  railway  from  the 
enjoyment  of  its  admittedly  illegal  occupation  of  the 
streets,  by  using  only  so  much  force  as  is  necessary,  has 
been  so  clearly  established  as  to  admit  of  no  doubt.  The 
cases  cited  by  the  counsel  for  the  trust  company  and  the 
inclined  plane  company  are  Easton  8.  E.  &  W.  E.  P.  Ry- 
Co.  vs.  City  of  Easton,  133  Pa.  St.  505,  19  Atl.  486,  a^d 
Asheville  St.  Ry.  Co.  vs.  City  of  Asheville,  109  N.  C.  688, 
14  8.  E.  316.  In  the  first  of  these  cases  a  street  railway 
company  had  an  admitted  right  to  ocupy  a  street  with  its 
tracks.  In  a  change  of  grade  made  by  the  city,  the  com- 
pany had  to  take  up  and  relay  its  tracks  for  a  short  dis- 
tance. The  city  claimed  the  right  to  require  it  to  lay  a 
particular  kind  of  rail.  The  company  laid  another.  The 
city  tore  it  up,  and  stopped  the  operation  of  the  road. 
The  company  relaid  it,  and  then  procured  an  injunction 
against  the  city's  further  interference.  The  Supreme 
Court  of  Pennsylvania  held   that  an   injunction   would 


170 

properly  issue  against  the  city,  whatever  the  merits  of 
the  controversy  over  the  different  kinds  of  rail,  because 
the  city  could  not,  before  submitting  the  question  to  the 
courts,  take  the  law  into  its  own  hands,  decide  a  doubtful 
question  of  law,  and  upon  the  assumption  that  its  de- 
cision was  right,  inflict  great  loss  upon  the  railway  com- 
pany's business,  especially  when  the  convenience  of  the 
public  might  be  seriously  affected  thereby.  The  North 
Carolina  case  was  similar  in  principle.  In  both  cases  the 
companies  were  rightfully  in  the  streets,  in  neither  case 
had  the  rights  of  the  parties  been  adjudicated  at  all  in  a 
court,  and  in  each  the  contention  of  the  city  authorities, 
out  of  which  the  action  grew-,  w^as  combated  by  the  rail- 
way company.  In  the  case  at  bar  it  has  been  decided 
finally,  and  it  is  not  now  denied  by  either  the  trust  com- 
pany or  the  inclined  plane  company,  that  the  grants  to 
the  latter  to  occupy  the  streets  in  question  have  all  ex- 
pired. This  would  seem  to  make  a  broad  distinction  be- 
tween the  c^se  at  bar  and  those  cited.  By  the  common 
law,  a  tenant  at  will,  who  is  notified  by  the  landlord  to 
leave  the  premises,  may  be  forcibly  ejected,  without  giving 
the  tenant  any  cause  of  action,  if  no  more  force  than  is 
necessary  to  remove  the  tenant  and  his  goods  is  used. 
Low  vs.  Elwell,  121  Mass.  309.  If  a  man  build  his  house 
upon  a  common,  a  commoner  may,  after  notice  tear  down 
the  house,  though  the  man  be  in  it,  and  this  without  in- 
curring liability  to  the  ejected  person.  Davies  vs.  Wil- 
liams, 16  Q.  B.  546.  More  than  this,  it  has  been  generally 
held  that  an  injunction  will  not  issue  against  threatened 
trespasses  where  the  complainant  cannot  allege  that  he 
has  good  title  to  the  property  about  to  be  entered  upon. 
Hart  vs.  Mayor,  etc.,  9  Wend.  571 ;  Schoonover  vs.  Bright, 
24  W.  Va.  698;  Cox  vs.  Douglass,  20  W.  Va.  175;  Tate  vs. 
Vance,  27  Orat.  571.  Whether  these  cases,  which  nearly 
all  concern  the  occupation  of  private  property,  would  ap- 


171 

ply  to  the  case  at  bar,  may  admit  of  question,  but  they 
certainly  suggest  forcible  analogies  of  it."* 

Judge  Taft  omitted  to  refer  to  what  Judge  Lurton, 
with  his  approval,  had  said  in  the  Court  of  Appeals,  76 
Fed.  317,  speaking  of  the  remedies  of  the  city: 

"A  litigant  may  not  execute  his  own  decree.  If  the 
adversary  will  not  quietly  surrender  the  subject  of  liti- 
gation resort  must  be  had  to  the  court  in  which  the 
right  wds  declared  for  the  proper  legal  writ,  and  for 
its  regular  execution.  It  is,  therefore,  proper  under  the 
allegations  of  the  bill  as  to  the  purposes  of  the  defendant 
(the  city  of  Cincinnati),  to  enjoin  it  from  taking  into 
its  own  hands  the  enforcement  of  the  decree  of  the  state 
court." 

This  w-as  more  than  an  authority;  it  was  an  adjudica- 
tion in  the  very  matter  before  the  court;  and  it  was  as 
conclusive  and  binding  on  the  Circuit  Court  as  any  other 
part  of  the  opinion  of  the  Court  of  Appeals. 

Thus  it  appears  that  the  learned  Circuit  Judge  cast  a 
doubt  on  a  proposition  of  law,  which  he  had  helped  to 
settle,  and  finally  so,  as  far  as  the  parties  to  this  litiga- 
tion were  concerned. 

Having  considered  the  four  questions  raised  by  the 
counsel  for  the  street  railway  company.  Judge  Taft 
proceeds  to  say : 


The  doubts  cast  by  Judge  Taft  on  the  question  whether  the  city  had  a  right  to 
dispossess  the  inclined  plane  company  by  force,  were  wholly  dispelled  by  him  in 
delivering  the  opinion  of  the  United  States  Circuit  Court  of  Appeals,  Lurton,  Circuit 
Judge,  and  Clark,  District  Judge  concurring,  in  the  subsequent  case  of  Iron  Mountain 
Ry.   Co.  V.  Memphis  37  C.   C.   A.   410,  421.  422;  96  Fed.   113. 

On  the  authority  of  Railroad  Co.  v.  Johnson  119  U.  S.  608,  and  other  English 
and  American  cases  it  was  held  that  the  city  had  no  such  right,  but  was  compelled 
to   resort   to  legal   means. 

Judge  Taft's  action,  at  the  circuit,  in  the  case  of  the  inclined  plane  company 
was  more  a  display  of  his  skill  in  diplomacy  than  his  skill  in  the  law.  What  he 
thought  the  court  could  not  do  directly,  he  accomplished  by  restoring  possession  to 
the  inclined  plane  company,  and  reading  the  riot  act  to  the  legislative  board  of  the 
city  of  Cincinnati,  and  to  the  Cincinnati  Street  Railway  Company.  His  diplomacy  was 
exercised  in  the  interest  of  the  public,  and  it  is  no  stretch  of  authority  for  a  judge 
to  act  as  a  conservator  of  the  peace. 


172 

"As  will  be  seen,  I  am  not  deciding  definitely  any  of 
the  issues  of  law  raised  by  the  counsel  for  the  inclined 
plane  company.  I  am  only  stating  what  appears  to  be 
sufficient  to  show  that  the  claims  made  by  them  are  at 
least  of  doubtful  validity.  This  court  does  not  decide 
that  Judge  Smith's  order  may  not  operate  as  an  injunc- 
tion, or  that  the  city  has  the  right  to  abate  the  wrongful 
occupation  of  the  streets  by  the  inclined  plane  company. 
All  that  is  held  is  that,  if  the  obstacle  of  the  receiver- 
ship is  removed  from  the  course  of  the  city,  it  could 
urge  reasonable  arguments  to  sustain  both  propositions 
in  defense  of  action  taken  by  it  on  the  faith  of  their 
validity.  In  such  a  case  this  court  ought  not,  by  the 
possession  of  its  receiver,  to  prevent  the  city  from  taking 
such  course  with  respect  to  a  remedy  as  it  may  be  ad- 
vised. The  whole  risk  of  any  course  taken  must  be  upon 
the  city.  If  it  does  an  act  in  contempt  of  the  superior 
court,  its  agents  must  answer  there.  This  court  assumes 
no  responsibility  for  any  action  the  city  may  take,  but 
it  is  the  court's  duty  to  remove  the  insuperable  obstacle 
to  the  city's  exercising  a  choice  of  remedies  interposed 
by  the  receiver's  possession  of  the  invalid  portion  of  the 
line." 

Judge  Taft  then  pointed  out  that  the  city  could  not 
exercise  the  power  to  remove  the  street  railways  as  a 
nuisance,  until  the  legislative  board  had  declared  them 
such,  and  he  concluded  by  announcing  the  decree  of  the 
court  as  follows: 

"The  order  of  the  court  upon  the  petition  of  the  city 
will  therefore  be  as  follows:  That  from  and  after  the 
receipt  by  the  receiver  of  a  notice  from  the  board  of  legis- 
lation that  his  operation  of  the  inclined  plane  railway  in 
any  of  the  streets  in  which  by  the  decree  of  the  Circuit 
Court  of  Appeals  and  grants  owned  by  said  inclined  com- 


173 

pany  have  expired,  is  unlawful  and  forbidden,  the  re- 
ceiver is  enjoined  from  operating  the  railway  in  such 
streets,  and  he  is  directed  to  surrender  possession  of  the 
property  of  the  inclined  plane  company  in  place  in  such 
streets  to  said  inclined  piane  company;  and  it  is  fur- 
ther ordered  that,  upon  written  application  filed  herein 
by  the  Louisville  Trust  Company,  the  receiver  shall  de- 
liver possession  of  all  the  remainder  of  the  property  of 
the  inclined  plane  company  now  in  his  custody  to  said 
company,  on  the  condition,  consented  and  agreed  to  in 
writing,  and  filed  herein  by  said  company,  that  it  will 
turn  over  to  the  receiver  herein  the  monthly  net  earn- 
ings from  the  operation  of  its  property,  after  payment  of 
the  running  expenses  thereof,  including  salaries,  wages 
and  supplies.  And  the  receiver  is  ordered,  within  two 
weeks  hereof,  to  file  a  full  and  complete  account  of  the 
receipts  and  disbursements  for  the  entire  period  of  his 
receivership.  Each  party  will  pay  its  own  costs  in  this 
proceeding." 

Judge  Taft  wound  up  his  opinion  by  reading  the  riot 
act  to  the  legislative  body  of  the  city,  in  the  following 
emphatic  language: 

"What  has  been  said  disposes  of  the  pending  questions. 
I  only  wish  to  add,  in  order  that  my  language  may  not 
be  misunderstood,  that  I  have  not  intended,  in  the  slight- 
este  degree,  to  advise  a  resort  by  the  city  to  violence  to 
enforce  its  rights  in  the  streets.  On  the  contrary,  I 
think  it  would  be  deplorable  if  the  city  authorities,  not 
accepting  the  weighty  suggestion  of  the  superior  court  in 
its  order  of  suspension,  and  not  abiding  the  expiration 
of  that  order,  should  foreclose  reasonable  negotiation,  and 
disgrace  the  city's  fair  name  by  a  course  probably  lead- 
ing to  a  breach  of  the  peace.     If  the  city  disregards  the 


174 

suggestion  contained  in  the  superior  court's  order  of 
suspension,  it  does  so  at  its  own  risk,  and  cannot  rely 
on  any  approval  of  such  a  course  by  this  court.  All  that 
this  court  decides  is  that,  when  the  city  demands  the 
right  to  pursue  remedies  to  enforce  rights  in  the  streets 
adjudged  to  belong  to  it  by  two  courts  of  last  resort, 
this  court  will  not, protect  a  party  which  is  violating 
those  rights  by  throwing  the  shield  of  its  receivership 
over  such  violation.  It  will  discharge  the  receiver,  and 
let  the  inclined  plane  company,  on  the  one  hand,  take 
the  risk  of  operating  the  invalid  portions  of  the  road, 
if  it  chooses,  and  the  city,  on  the  other,  that  of  any 
course  it  may  see  fit  to  pursue.  The  relation  of  this 
court  to  the  controversy  is  merely  incidental  and  ancil- 
lary, and  imposes  no  duty  upon  it  of  distinctly  deciding 
as  to  the'  lawful  remedies  of  the  parties,  if  it  can  free 
itself  from  that  relation,  as  it  can  and  will  by  the  order 
above  set  out." 

Not  long' after  the  delivery  of  Judge  Taft's  opinion, 
the  board  of  legislation  following  the  words  of  the  ordfer 
of  the  court,  notified  the  receiver  that  his  operation  of 
the  inclined  plane  street  railway  in  the  streets  where  the 
grants  had  expired  was  "unlawful  and  forbidden,"  and 
thereupon,  the  receiver  surrendered  possession  of  the 
property  to  the  Cincinnati  Inclined  Plane  Railway  Com- 
pany, first  requiring  that  company  to  agr^  to  turn  over  to 
the  receiver  the  monthly  net  earnings. 

The  board  of  legislation  refused  to  make  renewal  grants 
to  the  Cincinnati  Inclined  Plane  Railway  Co.,  but  did 
grant  the  streets  in  question  to  the  Cincinnati  Street 
Railway  Company. 

The  Cincinnati  Inclined  Plane  Railway  Company,  then 
filed  a  cross-complaint,  in  the  case  in  the  Superior  Court, 


175 

and  April  13,  1897,  obtained  an  order  restraining  the 
city  of  Cincinnati  and  the  Cincinnati  Street  Railway 
Company  from  interfering  by  force  or  otherwise  with 
the  operation  of  the  street  railway  until  the  expiration 
of  the  stay  of  the  injunction  for  six  months  from  Decem- 
ber 19,  1896. 

On  June  18,  1897,  the  day  before  the  stay  expired,  a 
further  stay  was  granted  until  June  25,  and  on  June  24, 
it  was  further  extended  to  June  30,  1897. 

On  June  23,  1897,  the  state  Supreme  Court,  constru- 
ing the  statutes  fixing  the  jurisdiction  of  the  Superior 
Court  in  special  and  in  general  term,  held  that  the  order 
of  suspension  of  December  19,  1897,  the  injunction  of 
April  13,  1897,  and  the  orders  of  suspension  of  June  18 
and  24,  1897,  were  void.  {Cincinnati  vs.  Railway  Co., 
56  Ohio  St.  675.) 

June  24,  1897,  the  Superior  Court  vacated  its  orders, 
and  the  litigation  was  at  an  end. 

This  left  the  city  of  Cincinnati,  and  the  Cincinnati 
Street  Railway  Company  at  liberty  to  dispossess  the  In- 
clined Plane  Railway  Company,  but  they  were  appar- 
ently unwilling  to  stop  the  operation  of  this  street  rail- 
way line,  which  ran  from  the  business  portion  of  the 
city  to  the  Zoological  Garden,  as  they  permitted  the 
Inclined  Plane  Company  to  continue  the  operation  of  the 
line  under  the  financial  supervision  of  the  receiver,  until 
all  the  property  of  the  Cincinnati  Inclined  Plane  Railway 
Company  was  purchased  at  foreclosure  sale,  by  the  Cin- 
cinnati Street  Railway  Company,  April  14,  1898. 

There  are  two  significant  things  connected  with  this 
litigation: 


176 

(1)  The  State  Supreme  Court  and  the  United  States 
Circuit  Court  of  Appeals,  both  held,  that  the  power  vest- 
ed by  statute  in  the  local  authorities  to  agree  on  the 
terms  and  conditions  on  which  they  would  consent  to 
the  occupation  of  the  streets  by  a  street  railway  com- 
pany included  the  power  to  fix  the  duration  of  the  grant, 
and  after  its  expiration  the  street  railway  company  would 
not  be  lawfully  in  the  streets  and  might  be  enjoined  from 
operating  therein. 

(2)  That  in  Cincinnati,  the  city,  its  new  grantee,  the 
Cincinnati  Street  Railway  Company,  and  its  old  grantee, 
the  Cincinnati  Inclined  Plane  Railway  Company,  recog- 
nized the  paramount  right  of  the  public,  to  have  the 
operation  of  the  street  railway  continued  after  the  ex- 
piration of  the  grant,  and  it  was  so  continued  until 
title  to  the  property  lawfully  passed,  and  possession  could 
be  surrendered  and  taken  without  stopping  the  oper- 
ation of  the  street  cars. 

In  the  case  of  the  Cincinnati  Inclined  Plane  Railway 
Company,  the  state  court  held,  that  the  grant  made  in 
1864  for  twenty  years,  expired  by  its  own  limitation 
in  1884,  and  another  grant  made  in  1871,  expired  in 
1891,  and  that  these  grants  had  not  been  extended  by 
an  act  of  the  legislature  passed  in  1877,  giving  inclined 
plane  railroad  companies,  organized  as  steam  railroads, 
power  to  o^^^l  and  operate  street  railways. 

The  company  held  other  grants  which  had  not  ex- 
pired by  their  own  limitation  and  one  that  was  without 
a  time  limit,  but  the  state  courts  disposed  of  them,  by 
holding  that  they  were  invalid  because  they  were  granted 
as  extensions  of  a  steam  railroad,  and  not  as  extensions 
of  a  street  railway  line. 


177 

The  opinion  of  the  superior  court  which  was  adopted 
by  the  state  supreme  court  did  not  discuss  or  consider 
the  question  whether  the  act  of  1877  had  not  validated 
the  grants. which  were  held  void.  Judge  Lurton,  in  de- 
iivering  the  opinion  of  the  court  of  appoals,  lield  that 
inasmuch  as  the  state  courts  liad  not  touched  upon  the 
question,  the  federal  court  was  at  liberty  to  dispose  of 
it  on  its  own  judgment. 

He  said: 

"This  is  a  question  res  Integra.  The  opinion  of  the 
state  court  does  not  directly  deal  with  this  as  a  distinct 
question.  It  is  true  that  the  court  did  liold  that  the 
ordinances  of  1871  and  Ocober,  1875,  by  which  the  in- 
clined plane  railroad  company  has  been  permitted  to  ex- 
tend its  railroad  from  the  base  of  its  incline  to  the  heart 
of  the  city,  at  Walnut  and  Fifth  streets,  and  from  the 
top  of  the  incline  to  the  corporation  line  at  the  Zoological 
Garden,  were  invalid,  on  the  ground  heretofore  stated, 
but  the  court  does  not  consider  the  curative  effects  of  tlie 
act  of  1877.  This  question  is  one  upon  which  the  Ohio 
court  has  expressed  no  definite  opinion,  and  if  the  decree 
is  of  no  effect,  as  res  adjudicata,  this  court  is  clearly  at 
liberty  to  pronounce  an  independent  judgment  as  to  the 
legal  effect  of  the  act  in  question  in  validating  the  then 
existing  contracts  between  the  city  and  the  Cincinnati 
Inclined  Plane  Railroad  Company,  and  this  independently 
of  the  ground  stated  in  a  former  part  of  this  opinion." 

Having  held  that  the  judgment  of  the  state  supreme 
court  was  not  res  adjudicata,  Judge  Lurton  proceeded 
to  hold  that  the  act  of  1877  did  validate  the  grants  held 
void  by  the  state  courts,  and  that  the  grant  without  any 
time  limitation  was  perpetual.  To  this  extent  the  court 
of  appeals  overruled  and  modified  the  judgment  of  the 
state  court,  and  remanded  the  case  to  the  United  States 


178 

Circuit,   with  directions  to  enforce  the  views  expressed 
by  Judge  Lurton. 

Four  elaborate  opinions  were  delivered  in  that  con- 
troversy, one  in  the  state  courts,  and  three  in  the  federal 
courts.  In  neither  of  them  wag  any  consideration  given 
to  the  rights  of  the  public.  Judge  Lurton  did  incident- 
ally say,  "The  city  was  but  a  trustee,  acting  for  the  pub- 
lic in  respect  of  the  granting  of  street  easements." 

And  Judge  Taft  in  remiting  the  parties  to  such  reme- 
dies as  they  might  have  after  the  possession  of  the  prop- 
erty was  restored  to  the  Cincinnati  Inclined  Plane  Rail- 
way' Co.,  did  say:  "The  question  whether  the  public 
would  or  should  be  inconvenienced  by  practically  destroy- 
ing this  line  is  one  the  responsibility  of  deciding  which 
may  justly  be  put  upon  this  chief  municipal  body,  and 
ought  to  be  avoided  as  far  as  possible  by  this  court." 

Whether  the  general  public  had  any  rights  which  the 
city  authorities  or  the  courts  were  bound  to  respect,  wa»s 
not  considered  or  passed  upon,  and  I  am,  therefore  at 
liberty  to  follow  the  example  set  by  Judge  Lurton,  and 
to  say,  that  the  question  is  res  Integra .  that  is,  untouched 
and  not  decided  or  adjudicated. 

The  grant,  without  any  time  limit,  held  by  the  Cincin- 
nati Inclined  Plane  Railway  Co.,  was  made  in  December, 
1871,  and  before  there  was  any  statute  in  Ohio  prohibit- 
ing street  grants  for  more  than  twenty-five  years.  Such 
an  act  was  not  passed  until  May  14th,  1878.  The  act  of 
May  1,  1852,  under  which  the  Cincinnati  Inclined  Plane 
Railway  Co.  was  ineorporated  as  a  steam  railroad,  con- 
tained this  section. 

"Sec.  12.  If  it  shall  be  necessary,  in  the  location  of 
any  part  of  any  railroad,  to  occupy  any  road,  street,  alley. 


179 

or  public  way,  or  ground  of  any  kind  or  any  part  thereof, 
it  shall  be  competent  for  the  municipal  or  other  corpor- 
ation or  public  officer  or  public  authorities,  owning  or 
having  charge  thereof,  and  the  railroad  company  to 
agree  upon  the  manner  and  upon  the  terms  and  condi- 
tions upon  which  the  same  may  be  used  or  occupied;  and 
if  said  parties  shall  be  unable  to  agree  thereon,  and  it 
shall  be  necessary  in  the  judgment  of  the  directors  of 
such  railroad  company  to  use  or  occupy  such  road,  street, 
alley,  or  other  public  way  or  ground,  such  company  may 
appropriate  so  much  of  the  same  as  may  be  necessary  for 
the  purpose  of  such  road,  in  the  same  manner  and  upon 
the  same  terms  as  is  provided  for  the  appropriation  of 
the  property  of  individuals  by  the  tenth  section  of  this 
act." 

The  Ohio  street  railway  act  of  1861  provided  that  no 
street  railway  should  be  constructed  or  commenced  until 
the  consent  of  the  corporate  authorities  had  been  obtained, 
and  such  authorities  were  made  competent  to  agree  "upon 
the  manner  and  upon  the  terms  and  conditions,"  upon 
which  the  street  railway  should  be  constructed.  {Laws 
of  OUo,   1861,   p.    66.) 

But  in  cities  of  the  first  class  having  a  population  ex- 
ceeding 80,000,  the  consent  of  a  majority  in  interest  of  the 
'Owners  of  the  abutting  property  was  required,  and  no 
grant  could  be  made,  except  to  the  person  or  corporation 
wliich  would,  on  advertised  proposals,  agree  to  carry  pas- 
sengers at  the  lowest  rates  of  fare.  (Laws  of  Ohio,  1860, 
p.  19,  Sees.  15-16.) 

These  statutory  provisions,  coupled  with  the  prmision 
of  the  act  of  1878  prohibiting  local  grants  for  more  than 
twenty-five  years,  and  a  provision  providing  for  renewal 
grants  without  a  letting  on  advertised  proposals,  are  still 
in  force,  and  have  been  hereinbefore  quoted. 


180 

The  state  and  federal  decisions  in  Ohio,  on  which  I 
have  commented,  may  be  entitled  to  great  weight,  in  any 
future  case  in  that  state  in  which  the  rights  of  the  general 
public  are  presented  and  insisted  upon,  but  they  are  not 
authority  in  Michigan,  and  can  have  no  weight  in  deter- 
mining the  law  of  Michigan. 

In  Ohio,  a  local  street  grant  is  held  to  be  a  state  fran- 
chise, subject  to  inquiry  by  proceedings  in  the  nature  of 
a  quo  warrcmto.  (State  vs.  Cincinnati  Gas  Light  &  Coke 
Co.,  18  Ohio  St.  2€2.) 

In  Michigan  it  is  settled  law  that  a  municipal  street 
grant  is  a  mere  contract  or  license  and  is  not  a  franchise 
subject  to  inquiry  by  quo  warranto,  [Maijhury  vs.  Mutual 
Gas  Ught  Co.,  38  Mich.  154.) 

The  Ohio  court  evidently  was  of  the  opinion  that  the 
local  authorities  in  making  a  street  grant  act  entirely  in 
the  capacity  of  agents  of  the  state,  and  therefore,  a  time 
limitation  prescribed  by  them  is  the  act  of  the  state,  and 
determines  the  duration  of  the  grant. 

On  the  other  hand  the  Michigan  court  was  of  the  opin- 
ion that  the  local  authorities  in  fixing  the  terms  and  con- 
ditions and  rates  of  fare,  of  a  street  grant,  act  in  their 
own  behalf  as  representatives  of  their  local  constituencies, 
and  do  not,  as  to  these  matters,  act  as  agents  of  the  state- 
at  all. 

Hence,  a  time  limitation  prescribed  by  them,  can  only 
relate  to  the  terms  and  conditions  and  the  rates  of  fare 
and  cannot  affect  the  franchise  to  maintain  and  operate 
granted  by  the  state,  nor  limit  the  duration  of  the  local 
consent  to  the  exercise  of  that  franchise  on  the  streets 
designated  in  the  grant. 

Will  have  something  more  to  say  on  this  subject  bye 
and  bye. 


181 

Other  street  grants  held  by  the  Cleveland  Electric  Rail- 
way Company  expired  February  10,  1908.  The  routes 
affected  were  much  more  important  to  the  public  than  the 
Garden  street  line,  and  the  experience  of  the  public,  the 
company  and  the  city  in  the  case  of  that  line,  put  the 
company  and  the  city  administration  in  a  more  amicable 
state  of  mind. 

A  public  appraisal  of  the  property  and  franchises  of 
the  company  was  made  in  open  sessions  of  the  common 
council.  That  appraisal  is  known  as  the  Goff-Johnson 
appraisal.  All  of  the  street  railways  in  Cleveland  were 
then  put  in  the  possession  and  control  of  the  Municipal 
Traction  Company,  organized  under  the  auspices  of  the 
Mayor  Johnson,  with  a  nominal  capital,  for  the  purpose  of 
acting  as  a  holding  company,  and  to  enable  it,  if  it  could, 
to  operate  the  street  railways  of  Cleveland,  for  three-cent 
fares. 

This  plan  proved  a  failure,  although  every  effort  was 
made  to  reduce  the  cost  of  the  service,  with  the  result  that 
a  bill  in  equity  was  filed  in  the  United  States  Circuit 
Court  by  the  Central  Trust  Company,  of  New  York, 
which  held  mortgages  on  the  property  of  the  Cleveland 
Electric  Hallway  Company. 

Receivers  were  appointed  November  12,  1908,  and  they 
have  since  ihen  been  in  charge  of  the  property  under  the 
direction  of  the  court. 

Finally  the  company  and  the  city  agreed  upon  terms  of 
an  adjustment  and  a  renewal  grant  for  twenty-tive  yeai*s 
to  the  Cleveland  Railway  Company,  the  successor  of  the 
Cleveland  Electric,  with  certain  exceptions,  among  them 
the  value  of  the  street  railway  prox)erty  and  the  rates  of 
fare,  below  the  maximum  of  four  cents  cash  fare,  seven 
tickets  for  twenty-five  cents,  and  one  cent  for  a  transfer. 
As  to  these  matters  the  parties  were  not  able  to  agree, 


182 

but  were  constrained  to  leave  them  to  the  arbitration  of 
United  States  District  Judge  Robert  W.  Tavler,  not  in 
his  judicial  capacity,  but  as  a  private  arbitrator. 

Judge  Taylor's  decision  as  arbitrator  was  delievered  to 
the  common  council  of  the  city  December  18,  1909,  and 
that  body  immediately  passed  the  ordinance,  previously 
drafted,  partly  in  blank,  giving  his  decision  effect. 

Judge  Tayler's  Decision. 

"Cleveland,  O.,  Dec.  17,  1909. 

"To  tihe  council  of  the  city  of  Cleveland  and  the  Cleve- 
land Railway  Co.,  Cleveland,  O. — Gentlemen:  I  make 
the  following  report,  in  reply  to  your  communication  of 
October  5,  submitting  to  me,  as  an  arbitrator,  the  decision 
of  certain  questions  involved  in  the  settlement  of  tlie 
street  railway  situation  in  this  city,  and,  also,  my  report 
on  the  question  submitted  to  me  by  the  Municipal  Trac- 
tion Co.,  the  Forest  City  Railway  Co.,  and  the  Low  Fare 
Railway  Co.,  respecting  the  obligation  arising  out  of  the 
guarantee  of  the  stock  of  the  Forest  City  Railway  Co.,  and 
of  so  much  of  tbe  stock  of  the  Cleveland  Railway  Co.  as 
was  sold  through  the  Municipal  Traction  Co.  and  by  it 
guaranteed  in  certain  terms: 

"1.  The  value  of  the  physical  property  of  the  Cleve- 
land Electric  Railway  Co.,  as  of  January  1,  1908,  was 
117,511.305.64. 

"2.  The  franchise  value  of  the  company's  franchises, 
as  of  that  date,  was  |3,615,843.89. 

"3.  The  total  value  of  all  of  the  property  of  the  Cleve- 
land Electric  Railway  Co.,  I  find,  therefore,  to  be 
121,127,149.58,  being  something  more  than  |1,000,000  less 
than  that  which  was  found  by  the  Goff-Johnson  appraisal. 

"4.  I  allow  nothing  for  good  will.  A  street  railway 
company  which  has  a  monopoly,  and  especially  if  it  has  a 
franchise  value  remaining,  can  have  no  good  will  value. 


183 

"5.  I  allow  nothing  for  going  value,  except  in  so  far 
as  that  is  the  result  of  the  necessary  expenditure  of  money 
in  building  the  road,  acquiring  its  land,  power  houses  and 
equipment  and  putting  them  into  successful  operation. 
The  expenditures  for  these  purposes  are,  and  necessarily 
must  be,  included  in  the  valuation  of  the  physical  prop- 
erty. 

"6.  I  offset  the  franchise  value  of  suburban  grants, 
whatever  they  may  amount  to,  against  the  burdens  of 
suburban  contracts,  to  whatever  extent  they  may  exist,  for 
the  reason  that  all  the  territory  covered  by  the  Cleveland 
Electric  lines  is  one  homogeneous  community,  destined 
soon  to  become  one  municijmlity  in  which  a  zone  system 
will  be  intolerable. 

"7.  I  am  of  opinion  that  there  is  a  moral,  and,  perhaps 
a  legal  obligation  on  the  community  in  connection  with 
the  guarantee  by  the  Municipal  Traction  Co.  of  stock  of 
the  Forest  City  Railway  Co.,  and  of  stock  of  the  Cleve- 
land Railway  Co.  sold  by  the  Municipal  Traction  Co.  In 
view  of  the  fact  that  the  settlement  recommended  by  me, 
should  it  become  operative,  will  make  the  stock  of  the 
Cleveland  Railway  Co.,  in  my  opinion,  intrinsically  worth 
par,  I  recommend  that  the  obligation  created  by  the  guar- 
antee be  adjusted  by  the  payment,  to  the  persons  who 
originally  purchase  the  same  on  the  faith  of  the  guarantee, 
of  an  amount  equal  to  7i/^  per  cent,  of  the  par  value  of 
such  guaranteed  stock  so  owned,  and  that  the  principal 
be  applied  to  fractional  shares  according  to  the  actual 
amounts  paid  thereon;  such  payments  to  be  in  full  satis- 
faction of  all  liability  under  the  guarantee. 

"I  fix  the  amount  at  7I/2  per  cent  because,  prior  to 
October  1,  1908,  all  such  stockholders  had  received  inter- 
est, or  dividends  at  the  rate  of  6  per  cent  per  annum. 

"Something  less  than  10  per  cent  of  the  guaranteed 
stock  has  been  sold  by  the  original  purchasers.    To  what 


184 

extent,  if  any,  tliese  former  owners  of  such  stock  may  be 
entitled  to  any  reimbursement  under  the  guarantee  I  am 
willing  to  consider  hereafter.  The  amount  involved  can 
in  no  event  be  a  very  large  sum,  as  less  than  10  per  cent 
of  all  the  guaranteed  stock  has  changed  hands. 

"The  practical  result  of  the  reduction  in  the  value  of 
the  Cleveland  Railway  Co.  property  will  be  to  make  the 
stock  of  that  company  not  having  an  origin  in  the  Munici- 
pal Traction  Co.'s  guarantee  "worth,  as  of  January  1,  1910, 
par  and  1%  per  cent,  being  the  amount  accruing  to  such 
stockholders  for  the  quarter  ending  October  1,  1908,  and 
thus  equalizing  for  that  period  those  stockholders  with  the 
stockholders  whose  stock  came  nnder  the  guarantee. 

"As  to  the  guaranteed  stock  still  in  the  hands  of  the 
original  purchasers,  it  will  be  w^orth,  as  of  January  1, 
1910,  par  and  7^2  per  cent. 

"8.  The  initial  rate  of  fare  should  be  3  cents  and  1 
cent  for  a  transfer,  without  rebate,  and  the  maximum 
rate  should  be  4  cents  for  a  single  fare,  seven  tickets  for 
25  cents  and  1  cent  for  a  transfer,  without  rebate. 

"9.     I  approve  the  suggestion  that,  if  consents  of  abut- 
ting property  owners  are  secured,  the  company  be  required  " 
to  extend  its  line  on  Lorain  avenue  to  the  city  limits,  if 
no  fair  arrangement  can  be  made  with  the  interurban 
company  for  the  use  of  its  tracks.    Yours  truly, 

"Robert  W.   Taylee.^^ 

After  eight  years  of  street  railway  war,  peace  w^as 
finally  reached  by  the  decision  of  a  United  States  judge, 
but  how  much  better  it  would  have  been,  if  at  the  expira- 
tion of  the  Garden  street  grant,  the  City  of  Cleveland  had 
filed  a  bill  in  equity  in  a  state  court  of  competent  juris- 
diction, alleging  tliat  the  rates  of  fare  being  charged  by 
the  Cleveland  Electric  Railroad  Company  were  excessive, 
and  in  an  orderly  and  legal  manner,  under  the  safeguards 
and  restrictions  of  a  regular  legal  proceeding,  the  question 


185 

of  the  reasonableness  of  the  rates  of  fare  charged,  had 
been  judicially  determined  and  decreed.  The  decree  of 
the  trial  court  could  have  been  reviewed  in  the  state  Su- 
preme Court,  and  if  need  be  in  the  Supreme  Court  of  the 
United  States.  If  the  citizenship  of  some  of  the  parties 
in  interest,  or  tlie  questions  presented,  justified  it,  the 
case  could  have  been  removed  to  the  Federal  Court,  and 
the  Supreme  Court  of  the  United  States  reached  by  that 
route. 

No  one  having  any  regard  for  law,  order  and  justice 
can  doubt  the  superiority  of  such  a  method  of  settling 
the  matters  in  dispute,  as  compared  with  what  did  actu- 
ally take  place. 

For  eight  years  the  people  of  Cleveland  were  disturbed 
by  a  series  of  plots,  and  counter  plots,  suits  and  injunc- 
tions, appeals  to  popular  and  class  interests,  and  election 
after  election,  all  over  the  street  railway  question  and 
three  cent  fares. 

After  the  opposing  forces  had  exhausted  their  energies, 
the  ability,  honesty  and  sense  of  justice,  of  a  trained 
jurist,  holding  a  responsible  official  position  and  having 
no  mentor  but  reason  and  truth,  settled  all  the  serious 
matters  in  .dispute,  and  brought  peace  and  harmony  to 
the  disquieted  city. 

Is  there  any  possible  reason  in  law  or  logic  why  the 
result  finally  reached  could  not  have  been  worked  out 
at  the  inception  of  the  controversy,  and  the  street  railway 
war  brought  to  a  close  before  it  had  fairly  commenced. 

The  ordinance  designated  to  settle  the  Cleveland  street 
railway  controversy  is  an  extraordinary  instrument  and 
is  an  attempt  to  automatically  adjust  the  rates  of  fare, 
from  time  to  time,  according  to  the  net  earnings  of  the 
company.  It  will  be  printed  in  the  appendix  and  com- 
mented on  in  the  XII.  subdivision  hereof. 


ISG 


XL 

The  final  and  conclusive  argument  in  support  of  the 
proposition  that  the  local  consent  is  perpetual,  and 
only  the  terms  and  conditions  and  the  rates  of  fare 
are  subject  to  time  limitations,  is  found  in  the  fact 
that  in  medcing  a  street  grant  the  local  authorities  act 
in  two  different  capacities:  (1)  in  granting  the  locsd 
consent  and  designating  the  streets,  the  aldermen  act 
as  the  agents  of  the  state  under  authority  delegated 
to  them  by  the  legislature;  and  (2)  in  agreeing  with 
a  street  railway  company  on  rates  of  fare,  and  the 
other  terms  and  conditions,  the  aldermen  by  per- 
mission of  the  legislature  act  as  the  contractual 
agents  and  representatives  of  the  people  of  the 
municipality,  in  virtue  of  their  election  by  the  people 
to  manage  and  control  (heir  local  affairs. 

A  municipal  street  grant  duly  accepted  by  the  grantee 
is  an  inviolable  contract  according  to  the  decisions  every- 
where in  the  United  States,  but  it  must  not  be  assumed 
that  in  granting  their  consent  the  local  authorities  do  not 
to  any  extent  act  as  agents  of  the  state,  and  wholly  in 
their  own  behalf. 

Under  the  Michigan  constitution  of  1850  the  control  of 
the  streets  and  highways  was  vested  in  the  legislature, 
and  street  railway  companies  and  other  public  service 
corporations  could  be  authorized  to  occupy  the  streets 
without  the  assent  of  the  local  authorities.  If  the  legisla- 
ture saw  fit  to  fix  the  t^rms  and  conditions  and  the  rates 
of  fai*e,  and  simply  required  the  local  consent,  without  any 
power  in  the  local  authorities,  except  that  of  consenting  or 


187 

refusing,  there  would  be  no  question,  but  that  they  would 
be  acting  as  the  agents  of  tlie  state  and  in  no  other  ca- 
pacity whatever. 

In  such  a  case  the  act  of  the  legislature  would  not  take 
effect  nntil  the  local  consent  was  granted.  It  would  be 
like  the  Michigan  local  option  law,  which  does  not  take 
effect  in  any  county  until  prohibition  is  adopted  by  a  vote 
of  the  people  of  the  county,  and  like  many  other  laws 
which  do  not  become  operative  until  approved  and  adopted 
by  a  popular  vote.  Requiring  a  popular  vote  or  the  ap- 
proval of  the  board  of  supervisors  of  a  county,  or  of  the 
common  council  of  a  city,  is  the  same  thing,  and  it  has 
never  yet  been  supposed  that  either  the  electors  or  the 
local  legislative  body,  could  place  a  time  limitation  on 
their  consent,  approval  or  adoption.  They  can  only  say 
yes  or  no;  and  to  qualify  their  action  by  limiting  it  to  a 
fixed  period  of  time  would  be  wholly  beyond  their  au- 
thority. 

This  view  of  the  local  power  is  not  changed  because  in 
addition  to  the  power  to  consent,  approve  or  adopt,  or  not, 
the  local  authorities  are  given  power  to  impose  terms  and 
conditions  and  rates  of  fare.  These  they  can  prescribe  for 
a  limited  period,  but  they  can  not  so  qualify  their  consent, 
approval  or  adoption. 

When  the  local  authorities  have  consented  to  the  occu- 
pation of  certain  designated  streets  by  a  street  railway 
company,  and  the  grant  has  been  accepted  and  the  road 
Qonstructed,  the  consent  is  as  permanent  and  perpetual  as 
the  public  improvement  itself  is  intended  to  be,  and  any 
time  limitation  agreed  npon  can  only  apply  to  the  terms 
and  conditions  and  rates  of  fare. 

The  local  consent  when  granted  gives  force  and  effect 
to  the  act  of  the  legislature  conferring  on  street  railway 


188 

corporations  the  franchise  of  constructing,   maintaining 
and  operating  street  railways  on  the  public  streets. 

It  is  indeterminable  and  irrevocable. 

National  Foundry  and  Pipe  Works  vs.  Oconto,  52  Fed. 
29,  is  a  case  where  Judge  Jenkins,  a  distinguished  and 
able  member  of  the  federal  judiciary,  had  occasion  to  con- 
sider the  nature  of  a  local  street  grant. 

The  law  under  which  the  Oconto  Water  Company  was 
organized  provided  that  "any  corporation  formed  for  the 
purpose  of  constructing  and  operating  waterworks  in  any 
city  or  village  to  supply  such  city  or  village  with  water 
for  fire  and  other  purposes  upon  such  terms  and  condi- 
tions as  may  be  agreed  upon,  and  may,  by  the  consent  of, 
and  in  the  manner  agreed  ujwn  with  the  proper  authori- 
ties of  such  city  or  village,  use  any  street,  alley,  lane, 
park  or  public  grounds  for  laying  water  pipes  therein; 
*  *  *  and  any  such  city  or  village  may,  by  contract 
duly  executed  by  the  proper  authorities,  acquire  the  right 
to  use  the  water  supplied  by  such  corporation,  or  such 
portion  thereof  as  it  may  desire,  upon  such  terms  and  con- 
ditions as  may  be  agreed  upon  by  such  corporation  and 
authorities  of  such  city  or  village." 

By  Sec.  930a,  of  the  statutes  of  the  state,  the  common 
council  of  every  city  was  authorized  to  permit,  subject  to 
such  rules  and  regulations  as  may  be  imposed,  the  laying 
of  pipes  in  the  streets  of  the  city,  and  their  maintenance 
and  use  for  the  purpose  of  conveying  water  or  steam  under 
the  surface  of  the  streets. 

On  July  9,  1890,  the  city  of  Oconto  made  a  grant  to  the 
Oconto  Water  Company  for  the  period  of  thirty  years,  and 
September  13,  1890,  the  company  transferred  to  Andrews 
&  Whitcomb,  as  security  for  a  loan,  the  entire  issue  of  the 
stock  of  the  company  together  with  "all  the  rights,  priv- 


189 

ileges,  immunities,  franchises  and  powere,  of  whatsoever 
name  and  nature,  which  were  granted  unto  the  said 
Oconto  Water  Company  in  and  by  that  certain  ordinance 
passed  by  the  common  council  of  said  city  of  Oconto  and 
approved  by  the  mayor  of  said  city  on  the  9th  day  of  July, 
1890." 

The  mains,  pipes  and  plant  of  the  company  were  not 
transferred,  and  the  question  in  the  case  was  whether  An- 
drews &  Whitcomb  got  any  rights  by  the  transfer  of  the 
local  contract,  and  whether  the  transfer  carried  with  the 
local  contract  the  franchise  to  operate  the  plant. 

After  referring  to  the  statutory  provisions,  the  learned 
judge  said: 

"The  city  is  therefore  only  authorized  to  permit  the  lay- 
ing of  pipes  in  the  streets,  and  their  maintenance  and  use. 
(Section  930a).  That  is  not  a  grant  of  power  to  bestow 
a  franchise,  but  permission  to  suffer  an  easement.  The 
law  of  its  incorporation  confers  upon  the  Oconto  Water 
Company  its  franchise  (1)  to  oWn  and  operate  the  water- 
works, and  (2)  to  use  the  streets  of  the  city.  Sanb.  & 
B.  St.,  §  1780.  The  former  power  is  without  condition ; 
the  latter  is  subject  to  the  assent  of  the  municipality.  The 
practical  efficacy  of  the  franchise  may  depend  upon  the 
discretionary  act  of  the  city.  The  franchise  is  not,  how- 
ever, derived  from  that  discretion,  but  from  the  will  of  the 
legislature.  The  law  authorizesi  the  city  to  assent  to  the 
exercise  of  a  power  granted  by  the  statute.  The  grant  of 
power  to  the  water  company — as  to  the  use  of  the  streets — 
becomes  operative  only  upon  the  happening  of  that  contin- 
gency of  municipal  assent.  That  is  not  a  grant  of  power 
to  a  city  to  confer  a  franchise.  Sims  vs.  Railway  Co.,  37 
Ohio  St.  556.  The  matter  is  somewhat  analogous  to  the 
case  of  an  act  of  the  legislature  taking  effect  only  upon 
the  assent  of  the  people  expressed  at  the  polls,  which  is 


190 

now  generally  held  to  be  valid,  upon  the  ground  that  the 
law  derives  its  potency  from  legislative  will,  and  not  from 
the  assent  of  the  poll.  So,  here,  the  right  to  use  the 
streets  was  conferred  upon  the  Oconto  Water  Company 
by  the  law  of  its  incorporation,  subject  to  the  contingency 
of  the  assent  of  the  city.  The  franchise  emanates  from  the 
legislature,  not  from  the  municipality.  The  ordinance  is 
not  an  exercise  of  legislative  power,  but  of  the  right  to 
contract.     (Indianapolis  vs.  Gaslight  Co.,  66  Ind.^  396.) 

"The  case  of  ^tatc  vs.  Madison  St.  Ry.  Co.,  72  Wis.  612, 
40  2V.  W.  Rep.  487,  is  not  i^i  conflict  The  ruling  there 
was  to  the  effect  only  that,  considering  the  terms  of  Rev. 
St.  Wis.,  §  1862,  the  provisions  of  the  ordinance  there 
under  review,  by  force  of  the  statute,  became  part  of  the 
law  of  the  incorporation  of  the  railway  company,  and  for 
violation  of  such  provision  an  action  could  be  maintained 
by  the  attorney  general  to  vacate  the  charter  or  annul  the 
existence  of  the  railway  company,  under  the  provision  of 
Rev.  St.  Wis.,  §  3241.  Applying  the  doctrine  of  that  case 
to  the  one  in  hand,  the  most  that  can  be  said  is  that  the 
conditions  of  the  assent  of  the  city  to  the  use  of  its  streets 
inhere  and  are  part  of  the  law  of  incorporation  of  the 
defendant  water  company.  None  the  less,  however,  are  its 
franchises  derived  from  the  legislature,  and  not  from  the 
municipality.  It  is  also  to  be  noticed  that  there  is  a 
marked  difference  in  the  statute  under  consideration  in 
that  case  and  those  in  question  here.  Section  1862,  there 
considered,  provides  that  "any  municipal  corporation 
*  *  .*  may  grant  to  any  such  corporation" — a  street 
railway  corporation — "such  use,  and  upon  such  terms  as 
the  prox)er  authorities  shall  determine,  of  any  streets  or 
bridges.  *  ♦  ♦  Every  such  road  shall  be  subject  to 
such  reasonable  rules  and  regulations  *  *  *  as  the 
proper  municipal  authorities  may  by  Ordinance  from  time 
to  time  determine."  There  the  legislation  does  not  directly 


191 

grant  to  the  railway  corporation  any  power  to  use  the 
streets,  but  delegates  to  the  municipality  the  right  to 
grant  the  power.  Here  the  jwwer  is  in  terms  conferred  by 
the  legislature  upon  the  water  company,  subject  to  the 
assent  of  the  municipality.  There  the  street  railway  is 
subject  to  constant  municipal  control.  Here  the  water 
company  is  independent  of  municipal  direction  except  in 
the  use  of  its  streets.  It  is,  I  think,  clear  that  the  power 
possessed  by  the  city  of  Oconto  was  only  to  yield  its  assent 
to  a  legislative  grant  of  the  use  of  its  streets,  and  to  con- 
tract for  a  supply  of  water.  The  franchises  of  the  water 
company  were  conferred  by  the  legislature  of  the  state, 
and  not  by  the  ordinance  of  the  city. 

"The  question  then  recurs,  what  rights  passed  to  An- 
drews &  Whitcomb  under  the  instrument  of  transfer  and 
their  foreclosure?  By  tJieir  terms  they  convey  or  assign 
only  such  rights  and  privileges  as  were  granted  to  the 
water  company  by  the  ordinance  of  the  city.  No  other 
franchise  or  rights  are  attempted  to  be  conveyed.  If  the 
right  to  the  use  of  tlie  streets  may  be  said  to  have  pro- 
ceeded from  the  municipality,  it  was  standing  alone,  a 
mere  easement.  The  transfer  of  such  naked  right  could 
not  carry  with  it  the  ownership  of  the  mains,  nor  the 
title  to  the  plant  as  an  entirety,  nor  the  franchise  to  oper- 
ate the  plant,  nor  to  the  land  upon  which  the  plant  was 
situated.  So  that  if  it  be  true,  as  is  here  claimed,  that  a 
naked  franchise  is  transmissible;  that  tlie  franchise  is  the 
main  and  the  plant  the  incident;  and  that  a  transfer  of 
the  former  carries  with  it  the  title  to  the  tangible  prop- 
erty essential  to  its  use  and  beneficial  enjoyment,  it  still 
remains  that  here  there  was  no  transfer  of  the  franchise 
to  operate  the  plant,  and  consequently  no  transfer  of 
tangible  property.  It  therefore  results  tliat  the  claim  of 
Andrews  &  WTiitcomlJ  to  the  plant  is  unfoundetl  in  law. 


192 

and  its  possession  hj  them  wrongful  as  against  the  com- 
plainant." 

In  short  the  court  held  that  the  franchise  to  maintain 
and  operate  granted  by  the  state  was  so  connected  with, 
and  had  such  a  relation  to,  the  physical  property,  that  a 
transfer  of  the  local  consent  without  a  transfer  of  the 
physical  property,  was  inoperative  and  void.     * 

A  mechanic's  lien  on  the  physical  property  had  been 
filed  and  perfected,  and  on  a  bill  to  foreclose  that  lien, 
the  court  held,  that  the  state  franchise  to  maintain  and 
operate  should  go  with  the  physical  property  and  be  in- 
cluded in  the  sale  thereof.  {National  Foundry  and  Pipe 
Works  vs.  Oconto  Water  Co.,  52  Fed.  43.) 

That  is  to  say,  whoever  owns  the  physical  property, 
owns  the  franchise  to  maintain  and  operate.  Hence  a 
lapse  of  the  local  contract  can  not  terminate  the  franchise 
to  maintain  and  operate,  or  in  any  wise  prevent  a  con- 
tinuation of  the  public  service. 

The  Detroit  United  Railway  owns  the  street  railways 
in  the  city  of  Detroit  and  it  has  a  right  to  operate  them, 
although  the  local  grant  has  expired  by  its  own  limitation. 

The  decision  of  the  United  States  Circuit  Court  of  Ap- 
peals in  Detroit  Citizens'  Street  Railway  Company  vs. 
City  of  Detroit,  12  C.  C.  A.  365,  64  Fed.  Rep.  628,  ap- 
proved by  the  Supreme  Court  of  the  United  States  in  De- 
troit vs.  Detroit  Citizens'  St.  Ry.  Co.,  184  U.  S.  368,  395, 
that  a  street  grant  may  extend  beyond  the  life  of  the  cor- 
poration to  which  the  grant  is  made  is  of  itself  when 
rightly  understood  and  applied,  conclusive  authority,  that 
the  physical  property  and  the  franchise  to  maintain  and 
operate  continue  to  exist  after  the  expiration  of  the  local 
grant. 


193 

The  old  Detroit  City  Railway  was  organized  on  tlie 
9th  daj'  of  May,  1863,  for  the  period  of  thirty  years,  and 
its  corporate  life  expired  May  9,  1893,  but  the  franchise 
granted  by  the  state  to  maintain  and  operate  did  not  ex- 
pire, because  it  was  so  connected  with  and  was  so  essen- 
tial to  the  physical  property,  that  it  was  not  separable 
from  that  property,  but  became  a  part  of  it,  as  the  main 
thing  necessary  to  give  it  value,  and  hence  that  franchise 
passed  to  the  corporation  to  which  the  Detroit  City  Rail- 
way before  or  at  its  dissolution  transferred  the  property. 

The  very  same  reasoning  applies  to  the  situation  at  the 
expiration  of  the  local  grant.  The  physical  property  is 
still  in  existence,  and  the  franchise  to  maintain  and  oper- 
ate is  still  necessary  and  essential  to  its  further  existence. 
This  fact  is  of  just  as  much  consequence,  and  is  entitled 
to  just  as  much  weight  at  the  expiration  of  the  local  grant 
as  at  the  expiration  of  the  grant  by  the  state  of  the  fran- 
chise of  corporate  life. 

By  what  sort  of  legal  reasoning  can  a  greater  and  more 
disastrous  effect,  be  given  to  the  expiration  of  a  local 
contract,  than  is  given  to  the  expiration  of  a  franchise 
granted  by  the  state.  The  state  franchise  to  maintain  and 
operate  survives  the  one,  why  not  the  other?  If  any  dif- 
ference is  to  be  recognized  should  it  not  be  that  the  local 
grant  being  of  an  inferior  nature,  and  of  lesser  conse- 
quence, its  expiration  ought  not  to  be  given  as  much  effect 
as  the  expiration  of  the  franchise  of  corporate  existence. 

The  physical  property  with  the  franchise  to  maintain 
and  operate  may  be  mortgaged,  and  sold  on  foreclosure 
sale,  and  may  be  levied  on,  and  sold  on  execution  sale.  As 
we  have  seen  a  natural  person  may  become  the  purchaser, 
although  not  possessed  in  his  own  right  of  any  franchise 
to  maintain  and  operate. 


194 

If  a  corporation  possessed  of  such  a  franchise  should 
become  the  purchaser  it  could  maintain  and  ox>erate  under 
its  own  franchise,  or  under  the  franchise  obtained  on  its 
purchase  of  the  property. 

A  corporation  competent  to  hold  the  property  could  be- 
come the  purchaser,  although  it  did  not  itself  possess  any 
franchise  to  maintain  and  operate.  Is  there  any  doubt  but 
that  a  trust  company,  or  a  simple  bond  holding  company 
could  become  the  purchaser  and  acquire  the  franchise  to 
maintain  and  operate? 

"The  franchise  of  being  a  corporation  need  not  be  im- 
plied as  necessary  to  secure  to  the  mortgage  bondholders 
or  the  purchasers  at  a  foreclosure  sale,  the  substantial 
rights  intended  to  be  secured.  They  acquire  the  ownership 
of  the  railroad  and  the  property  incident  to  it  and  the 
franchise  of  maintaining  and  operating  it  as  such,"  etc. 
{Memphis  R.  R.  Co.  vs.  Commissioners,  112  U.  S.  609; 
New  Orleans,  etc.  R.  R.  Co.  vs.  Delamore,  114  TJ.  8.  501.) 

To  hold  that  a  municipality  in  making  a  street  grant 
could  prescribe  terms  and  conditions  that  would  over- 
throw this  wise  and  wholesome  rule  of  law,  would  in  effect 
give  it  a  greater  power  to  destroy  a  right  of  property  than 
is  possessed  by  the  state  itself.  Indeed  it  Avould  give  it 
a  power  that  can  not  be  exercised  in  this  country  as  long 
as  our  constitutional  guaranties  prevail  and  are  enforced. 

Detroit  has  it's  Caesar,  and  he  is  wearing  a  mantle  of 
expired  street  grants.  The  lean  and  hungi-y  Cassius  may 
well  inquire  of  the  noble  Brutus : 

"Now,  in  the  names  of  all  the  gods  at  once. 
On  what  meat  doth  this  our  Caesar  feed. 
That  he  has  grown  so  great?" 

In  the  Indianapolis  street  railway  case  of  City  Railway 
Co.  vs.  Citizens^  Railroad  Co.,  166  U.  8.  557,  it  appeared 


195 

that  in  1861  the  Indiana  legislature  passed  an  act  author- 
izing the  incorporation  of  street  railway  companies,  and 
it  was  provided  that  the  stockholders  in  such  companies 
should  be  a  corporation  in  perpetuity  and  should  have 
power  to  construct,  maintain  and  operate  street  railways, 
but  should  not  do  so  in  any  incorporated  city  without  first 
obtaining  the  consent  of  the  common  council  to  the  loca- 
tion, survey  and  construction  of  the  railroad  through  or 
across  the  public  streets  of  the  city. 

The  Citizens'  Street  Railway  Company  was  organized 
uuder  that  act,  and  the  common  council  of  Indianapolis, 
January  18,  1864,  passed  an  ordinance  making  a  grant  to 
the  company  for  thirty  years.  April  7,  1880,  the  ordinance 
was  amended  by  making  the  period  thirty-seven  years  in- 
stead of  thirty. 

In  1893  the  common  council  made  a  grant  to  a  rival 
company  known  as  the  City  Railway  Company,  which 
authorized  it  to  lay  and  maintain  street  railways  upon 
certain  streets,  many  of  which  were  already  occupied  by 
the  Citizens'  Street  Railroad  Company,  which  had  suc- 
ceeded the  Citizens'  Street  Railway  Company. 

In  the  United  States  Circuit  Court,  Woods,  Circuit 
Judge,  delivering  the  controlling  opinion,  it  was  held  that 
the  consent  of  the  city  had  relation,  not  to  the  termina- 
tion of  street  railway  franchises,  but  rather  to  the  manner 
of  their  exercise,  and  that  the  provision  of  the  ordinances 
limiting  the  duration  of  the  grant  was  void. 

It  was  further  held  that  if  the  original  limitation  of 
thirty  years  was  valid,  so  was  the  seven  years'  extension, 
and  the  Citizens'  Railroad  Company  was  entitled  to  relief 
to  protect  it  during  the  remaining  portion  of  the  extended 
period,  viz.,  to  January  18,  1901,  (64  Fed.  647). 


196 

The  Supreme  Court  of  the  United  States  modified  the 
decree  below  by  striking  out  the  words  "without  regard  to 
any  limitation  of  time  mentioned  in  any  ordinance  of  the 
city,"  and  the  word  "forever,"  but  expressly  declined  to 
express  an  opinion  upon  tJie  question  whether  the  fran- 
chise from  the  city  was  perpetual.  Mr.  Justice  Gray  and 
Mr.  Justice  White  only  concurred  in  the  result.  Mr.  Jus- 
tice Shiras  was  of  the  opinion  that  the  decree  should  be 
affirmed  without  modification.  Mr.  Justice  Harlan  did  not 
sit  in  the  case. 

This  Indiana  case  can  not  be  regarded  as  an  authority 
on  the  question  of  the  duration  of  such  municipal  street 
grants.  Nevertheless,  the  reasoning  of  Judge  Woods  is 
entitled  to  its  full  weight,  because  it  was  not  reviewed  or 
overruled  by  the  Supreme  Court. 

In  the  Chicago  street  railway  case,  reported  as  Govin 
vs.  City  of  Chicago  J  132  Fed.  848,  and  Blair  vs.  Chicago, 
201  U.  S.  400,  it  appeared,  that  August  15,  1868,  the  com- 
mon council  of  the  city  of  Chicago,  passed  an  ordinance 
making  a  street  railway  grant  to  three  persons,  and  those 
Avho  should  become  associated  with  them,  and  which  grant, 
in  case  the  grantees  became  incorporated,  was  to  pass  to 
the  corporation.  The  ordinance  contained  t,erms  and  con- 
ditions and  fixed  the  rate  of  fare  at  five  cents,  and  it  was 
to  "extend  to  the  full  time  of  twenty-five  years,"  and  until 
the  city  purchased  the  property. 

The  Illinois  l^islature,  February  14,  1859,  passed  an 
act  making  the  grantees,  and  their  successors,  a  corpora- 
tion for  the  term  of  twenty-five  years  under  the  name  of 
"The  Chicago  City  Kail  way  Company."  This  act  referred 
to  the  ordinance,  affirmed  its  terms  and  conditions,  and 
vested  the  local  grant  in  the  corporation. 


197 

It  also  created  another  street  railway  corporation  under 
the  name  of  "The  North  Chicago  City  Railway  Company," 
and  conferred  on  it  the  like  rights,  powers  and  privileges. 

By  an  act  approved  February  21,  1861,  another  street 
railway  company  was  incorporated  for  twenty-five  years, 
under  the  name  of  "The  Chicago  West  Division  Railway 
Company."  The  act  referred  to  the  act  of  February  14, 
185&,  as  containing  the  jwwers  granted. 

An  act  of  the  Illinois  legislature  passed  over  the  gov- 
ernor's veto,  February  6,  1865,  amended  the  act  of  Febru- 
ary 14,  1859,  and  the  act  of  February  21,  1861,  by  striking 
out  of  each  the  words,  "for  the  term  of  twenty-five  years," 
and  inserting  in  lieu  thereof  "for  ninety-nine  years."  It 
was  expressly  provided  that  the  extension  of  the  period  of 
corporate  existence  was  to  be  "upon  such  terms  and  con- 
ditions and  with  such  rights  and  privileges,  immunities 
and  exemptions  as  the  common  council  has  or  rruiy  hy  con- 
tract with  said  parties  or  any  or  either  of  them,  prescribe, 
and  any  and  all  acts  or  deeds  of  transfer  of  rights,  priv- 
ileges or  franchise,  between  the  corporations  in  said  sev- 
eral acts  named  or  any  two  of  them,  and  all  contracts, 
stipulations,  licenses  and  undertakings  made,  entered  into 
or  given,  and  as  made  and  amended,  by  and  between  the 
said  common  council,  and  any  one  or  more  of  the  said  cor- 
porations, respecting  the  location,  use,  or  exclusion  of 
railways  in  or  upon  the  streets,  or  any  of  them  of  said 
city,  shall  be  deemed  and  held  and  continued  in  force 
during  the  life  hereof,"  etc. 

In  1903  the  property  of  these  Chicago  street  railway 
companies  passed  into  the  custody  of  receivers  appointed 
on  judgment  creditor's  bills  by  the  United  States  Circuit 
Court  for  the  Northern  District  of  Illinois.  The  receivers 
filed  ancillary  bills  to  establish  the  rights  of  the  companies 
under  the  act  of  1865. 


198 

The  case  was  heard  before  Orosscup  and  Jenkins,  Cir- 
cuit Judges,  who  held  that  as  to  all  the  street  grants  made 
before  the  Illinois  constitution  of  1870  was  adopted,  the 
period  of  their  duration  had  been  extended  by  the  act  of 
1865,  for  ninety-nine  years. 

Their  decision  was  review^ed  in  the  Supreme  Court  of 
the  United  States.  The  opinion  of  the  court  was  delivered 
by  Mr.  Justice  Day.  Looking  at  each  of  the  local  grants 
as  an  entirety,  and  antedating  as  they  did  the  creation  of 
the  corporations,  and  regarding  them  as  within  the  charter 
powers  of  the  common  council,  without  other  legislative 
sanction,  it  was  held  tliat  the  local  grants  were  not  ex- 
tended by  the  act  of  1865. 

Justices  McKenna,  Brown  and  Brewer  dissented  in  an 
opinion  by  Justice  McKenna,  in  which  the  majority  opin- 
ion was  reviewed  and  criticised. 

Both  opinions  are  learned  and  able,  but  the  conflict  of 
arguments  and  reasons  leaves  the  subject  in  a  sort  of  in- 
tellectual Gordian  knot,  difflcult  to  untie,  but  easily  sev- 
ered and  separated  into  two  parts. 

Applied  to  the  rates  of  fare  and  the  other  terms  and  con- 
ditions of  the  municipal  street  grants,  the  majority  opin- 
ion is  sound  and  convincing,  but  in  so  far  as  it  fails  to 
separate  the  franchise,  emanating  from  the  state,  of  main- 
taining and  operating  the  street  railways  and  the  local 
consent  to  itS'  exercise  in  the  streets  designated  and  occu-, 
pied  on  the  one  hand,  from  the  terms  and  conditions  and 
rat«s  of  fare  of  the  local  grants  and  contracts  on  the 
other,  it  is,  from  my  point  of  view,  clearly  erroneous. 

The  minority  opinion  applied  to  the  franchise  to  main- 
tain and  operate  and  the  local ,  consent,  is  unanswerable, 
but  when  applied  to  the  terms  and  conditions  and  rates  of 


199 

fare,  it  is  erroneous,  and.  is  fully  answered  by  the  majority 
opinion. 

The  one  opinion  goes  too  far  in  one  direction,  and  the 
other  goes  too  far  in  the  other  direction.  Neither  is  alto- 
gether sound  or  unsound.  The  counsel  for  the  street  rail- 
way companies  claimed  too  much  and  lost  all.  If  they 
had  made  a  strong  contention  in  support  of  the  distinction 
I  have  endeavored  to  establish,  they  might  have  obtained 
a  decision,  that  although  the  local  contracts  had  expired, 
the  right  to  maintain  and  operate  the  street  railways,  sub- 
ject in  the  absence  of  new  contracts,  to  common  law  obli- 
gations, had  been  extended  for  ninety-nine  years,  and  for 
as  much,  longer  as  the  physical  property  of  the  companies 
remained  in  existence,  and  in  their  ownership  or  that  of 
their  successors  and.  assigns. 

It  is  quite  clear  that  all  of  the  learned  judges  of  the 
Supreme  Court  of  the  United  States  could  have  harmon- 
ized their  views  on  the  line  of  demarkation  which  I  have 
attempted  to  draw. 

This  much  can  be  said  in  behalf  of  the  counsel  for  the 
street  railway  companies,  that  they  had  a  very  strong  case 
on  both  aspects  of  the  question,  and  they  are  pardonable 
for  not  having  been  able  to  foresee  that  Mr.  Justice  Day 
and  his  associates  would  have  the  learning  and  ability  to 
defeat  a  good  part  of  their  case,  and  in  doing  so  would 
sweep  their  whole  case  away. 

The  decision  of  the  Supreme  Court  of  the  United  States 
in  the  Chicago  street  railway  case  can  have  no  value  as  an 
authority  in  the  determination  of  the  Michigan  case  we 
have  in  hand,  for  the  very  good  reason  that  the  question 
presented  was  one  of  statutory  construction,  concerning 
the  meaning  of  an  extraordiary  act  of  the  legislature  of 
Illinois  extending  the  corporate  life  of  certain  street  rail- 


200 

way  companies  from  twenty-five  to  ninety-nine  years,  and 
which  act  it  was  claimed,  also  made  a  like  extension  of 
the  municipal  street  grants  held  by  the  companies.  The 
local  grants  had  all  been  made  for  twenty-five  years,  or 
less,  and  it  was  claimed  that  the  act  of  the  legislature  ex- 
tended them  for  ninety-nine  years,  as  well  as  the  corporate 
life  of  the  companies. 

The  court,  without  violating  any  of  the  recognized  rules 
of  construction,  reached  the  conclusion  that  the  local 
grants  were  not  extended. 

Whatever  conclusion  one  may  reach  as  to  the  merits,  as 
an  authority  in  other  cases,  of  the  decision  of  the  Supreme 
Court  of  the  United  States  in  the  Chicago  street  railway 
case,  it  can  be  asserted  without  any  danger  of  successful 
contradiction,  that  the  court  did  not  express  any  opinion 
on  what  the  rights  and  remedies  of  the  parties  and  of  the 
general  public  would  be  in  case  the  city  of  Chicago  had 
undertaken  by  injunction  or  otherwise  to  dispossess  the 
street  railway  companies  and  to  compel  a  cessation  of  the 
public  service. 

It  is  not  conceivable  that  any  court  would  ever  have 
required  or  permitted  the  street  railway  companies  of 
Chicago  (serving  as  they  do,  in  whole  or  in  part  two  mil- 
lions of  people),  to  stop  operating  their  cars  over  the 
streets  of  the  city  for  even  one  day. 

The  Supreme  Court  of  the  United  States  has  never  ren- 
dered a  decision  making  such  a  result  possible,  and  from 
what  we  can  judge  of  the  decisions  in  the  analogous  cases 
cited  in  other  parts  of  this  brief,  it  is  not  likely  the  court 
ever  will  render  any  such  decision. 

The  decision  of  the  Supreme  Court  of  the  United  States 
in  the  Chicago  Street  Railway  case  of  Blair  vs.  Chicago, 


201 

201  U.  S.  400,  left  the  street  railway  companies  in  pos- 
session of  the  streets  under  a  number  of  local  grants 
which  had  expired. 

The  state  legislature  passed  an  act  authorizing  muni- 
cipal ownership,  but  the  proposition  was  defeated  by  the 
electors  of  the  city,  whereupon  the  city  and  the  street 
railway  companies  came  to  an  amicable  adjustment.  It 
was  found  and  agreed  that  the  property,  owned  and  con- 
trolled and  to  be  acquired  by  the  Chicago  City  Railway 
Company  was  of  the  value  of  $21,000,000  and  that  of  the 
Chicago  Railways  Company  was  $29,000,000. 

The  rates  of  fare,  with  transfers,  were  fixed  at  five 
cents  for  each  passenger  twelve  years  of  age  or  over,  and 
three  cents  for  each  passenger  under  twelve  years  of  age; 
children  under  seven  years  of  age  accompanied  by  a  per- 
son paying  fare  to  be  carried  free. 

The  gross  earnings  of  the  street  railways  and  from 
all  sources,  are  to  be  applied : 

(1)  Operating  expenses,  maintenance  and  repairs 
and  taxes;  and  after  three  years,  six  per  cent  of  gross 
receipts  shall  be  set  apart  for  a  maintenance  and  repairs 
fund,  and  eight  per  cent  for  a  renewals  and  depreciation 
fund. 

(2)  Interest  at  five  per  cent  on  the  capital  investment 
of  $50,000,000  and  such  additions  thereto  as  are  author- 
ized by  the  ordinances. 

(3)  The  residue  of  the  gross  receipts  to  be  divided 
between  the  company  and  the  city;  forty-five  per  cent  to 
be  retained  by  the  company,  and  fifty-five  per  cent,  to  be 
paid  to  the  city. 

The  city  is  given  the  right  to  purchase  the  property 
at  any  time  on  payment  to  the  company  of  the  capital  in- 
vestment; and,  subject  to  certain  qualifications,  the  city 


202 

can  authorize  any  other  street  railway  company  as  its 
licensee  to  purchase  the  property  at  the  same  price,  plus 
twenty  per  cent  thereof. 

If  the  city  or  its  licensee  does  not  purchase  the  property 
prior  to  February  1,  1927,  the  city  agrees  not  to  grant  the 
streets  to  a  new  company,  except  on  the  condition  that 
such  new  company  will  purchase  the  property  upon  the 
same  terms  as  the  city  might  then  purchase  it. 

The  two  ordinances  of  February  11,  1907,  have  the  same 
general  terms  and  provisions,  and  are  only  different  in 
matters  of  detail,  necessary  to  adapt  them  to  each  com- 
pany separately. 

A  copy  of  the  ordinance  granted  to  the  Chicago  City 
Railway  Company  will  be  printed  in  the  appendixes  as 
No.  2. 

It  is  a  recognition  by  the  city  of  the  permanent  and  per- 
petual nature  of  street  railway  property,  and  it  precludes 
any  destruction  or  confiscation  of  the  property  by  the  city. 

As  I  have  said  such  recognition  is  absolutely  necessary 
to  secure  as  low  a  fare  as  five  cents. 

The  financial  results  of  the  Chicago  street  railway  or- 
dinances for  the  first  year,  expiring  January  31,  1908, 
are  shown  by  the  published  "Report  of  the  Board  of  Sup- 
ervising Engineers."  Bion  J.  Arnold  is  chairman  of  the 
board. 

The  number  of  revenue  passengers  was  372,123,199,  and 
the  number  of  transfers  and  free  passengers  was  246,177,- 
067. 

The  following  figures  were  compiled  by  the  board  for 

the  ptirpose  of  showing  what  became  of  the  five  cents  paid 

by  each  revenue  passenger. 

cents. 

Paid  in  wages  to  employees  2.24 

Paid  for  materials,  supplies,  and  other  expenses 
incident  to  the  maintenace,     operation     and 

management  of  the  railways 1.16 


203 

Paid  for  taxes 10 

Interest  on  value  of  properties 75 

Profit  paid  to  the  railways 34 

Profit  paid  to  the  city 41 

Total 5.00 

The  additions  to  the  capital  investment  during  the  year, 
including  some  made  between  June  30,  1906,  and  February- 
1,  1907,  amounted  to  $11,641,192.65,  which  was  mainly  ex- 
pended for  the  rehabilitation  required  by  the  ordinances. 

CHICAGO  RAILWAYS  COMPANY—CHICAGO  CITY 
RAILWAY  COMPANY. 

Combined  Income  Account. 
For  the  year  ended  January  31,  1908. 
Earnings : 

Passengers $18,464,553.85 

Chartered  cars 6,227.50 

Mail  cars 56,420.41 

Newspaper  cars 1,800.00 

Advertising 78,208.32 

Rent  of  land  and  buildings 3,472.00 

Rent  of  equipment 37,569.16 

Sale  of  power 40,424.57 

Interest  on  deposit  (net) 52,350.48 

Miscellaneous    82,068.02 

Gross  earnings .$18,823,094.31 

Expenses:    Schedule  No.  1. 

Maintenance  of  way  and  structures. .  .$  1,230,035.42 

Maintenance  of  equipment 1,473,763.46 

Operation  of  power-plants 1,933,456.73 

Operation  of  cars 5,835,092.26 

General  expenses 2,039,424.62 

Expense,  account  investment  real  estate         53,519.04 


204 

Taxes 439,305.53 

Renewals 171,568.95 


Total  expenses |13,1T6,166.01 

Net  earnings  from  operation |  5,646,928.30 

From  wMch  deduct: 

Interest  on  capital  invested  at  5^ 2,802,167.43 


Net  earnings $  2,844,760.87 

Divisible  thus: 

City  of  Chicago,  55;^ f  1,564,618.47 

Companies,  45^ 1,280,142.40 


Operating  expenses  and  renewals,  per 
cent  gross  earnings 70^ 


205 


XII. 

There  are  many  practical  reasons  concerning  the 
welfare  and  happiness  of  the  people,  why  the  street 
railway  business  of  the  city  of  Detroit  and  its  suburbs, 
cannot  be  conducted  on  the  theory,  that  at  the  ex- 
piration of  municipal  street  grants,  the  municipalities 
have  the  power  to  dictate  terms  and  conditions  said 
rates  of  fare,  regardless  of  the  question  whether  they 
are  reasonable  or  unreasonable. 

If  street  railways  are  regarded  as  permanent  public 
improvements,  and  the  investment  therein  not  subject  to 
destruction  at  the  expiration  of  the  local  grants,  by  an 
enforced  removal  from  the  streets  or  by  an  arbitrary  re- 
duction of  fares  having  a  like  result,  the  question  what 
is  a  reasonable  rate  of  fare,  is  not  difficult;  but  if  the 
capital  invested  is  subjected  to  these  risks,  the  question 
is  fathomless. 

In  all  of  the  reasonable  rate  cases  decided  by  the  Su- 
preme Court  of  the  United  States  the  investments  were 
permanent. 

Steam  railroads:  {Reagan  vs.  Farmers  Loan  &  Trust 
Co.,  154  V.  8.,  362;  Smyth  vs.  Ames,  169  U.  8.,  466;  Ex- 
parte  Young,  209  U.  8.,  123;  Southern  Ry.  Co.  vs.  8t. 
L(mis  Hay  &  Grain  Co.,  214  U.  8.,  2^7.) 

Water  and  irrigation  works:  {8an  Diego  Land  &  Town 
Co.  vs.  Jasper,  189  U.  8.,  439;  Stanislaus  County  vs.  San 
Joaquin,  etc.  Co.,  192  U.  8.,  201 ;  Knoxville  vs  Water  Co., 
212  V.  8,  1) 

Gas  works:  (  Wilcox  vs.  Consolidated  Gas  Works.  212 
U.  8.,  578.) 


206 

Permanent  turnpike:  {Covington,  etc.,  Turnpike  Co. 
vs.  Sandford,  164  U.  S.,  578.) 

Telephone  system:  [Home  Telephone  Co.  vs.  Los 
Angeles,  211  U.  S.,  265.) 

In  the  Knoxville  water  works  case,  the  court  summar- 
ized its  leading  prior  decisions;  and  as  it  was  not  satis- 
fled  that  the  rat,es  in  question  were  confiscatory,  dis- 
missed the  bill  of  the  water  company  without  prejudice 
to  the  filing  of  a  new  bill  if  the  rates  proved  to  be  in- 
adequate. 

The  court  in  an  opinion  by  Mr.  Justice  Moody,  said : 

"It  cannot  be  doubted  that  in  a  clear  case  of  confis- 
cation it  is  the  right  and  duty  of  the  court  to  annul  the 
law.  Thus  in  Reagan  vs.  Farmers'  Loan  &  Trttst  Co.,  154 
U.  8.,  362,  where  the  property  was  worth  more  than  its 
capitalization,  and  upon  the  admitted  facts  the  rates  pre- 
scribed would  not  pay  one-half  tJbe  interest  on  the  bonded 
debt;  in  Covington  etc.  Turnpike  Co.  vs.  Sanford,  164  U. 
S.,  578,  where  the  rates  prescribed  would  not  even  pay 
operating  expenses;  in  Smyth  vs.  Ames,  169  U.  S.,  466, 
where  the  rates  prescribed  left  substantially  nothing  over 
operating  expenses  and  cost  of  service;  and  in  Expartc 
Young,  supra,  where,  on  the  aspect  of  the  case  whicli 
was  before  the  court,  it  was  not  disputed  that  the  rates 
prescribed  were  in  fact  confiscatory,  injunctions  were 
severally  sustained.  But  the  case  before  us  is  not  a  case 
of  this  kind.  Upon  any  aspect  of  the  evidence  the  com- 
pany is  certain  to  obtain  a  substantial  net  revenue  un- 
der the  operation  of  the  ordinance.  The  net  income,  in 
any  event,  would  be  substantially  6  per  cent,  or  4  per 
cent  after  an  allowance  of  2  per  cent  for  depreciation. 
See  Stanislaus  County  vs.  Sam  Joaquin  Co.,  192  TJ.  S.  201. 
We  cannot  know  clearlv  that  the  revenue  would  not  much 


207 

exceed  that  return.  We  do  not  feel  callefl  upon  to  de- 
termine whether  a  demonstrated  reduction  of  income  to 
that  point  would  or  would  not  amount  to  confiscation. 
Where  the  case  rests,  as  it  does  here,  not  upon  observa- 
tion of  the  actual  operation  under  the  ordinance,  but 
upon  speculation  as  to  its  efifect,  based  upon  the  oi)era- 
tions  of  a  prior  fiscal  year,  we  will  not  j^ess  whether  the 
substantial  return  certain  to  be  earned  would  lack  some- 
thing of  the  return  which  would  save  the  effect  of  the 
ordinance  from  confiscation.  It  is  enough  that  the  whole 
case  leaves  us  in  grave  doubt.  The  valuation  of  the  prop- 
erty was  an  estimate  and  is  greatly  disputed.  The  ex- 
pense account  was  not  agreed  upon.  The  ordinance  had 
not  actually  been  put  into  operation ;  the  inferences  were 
based  upon  the  operation  of  the  preceding  year;  and  the' 
conclusion  of  tlie  court  below  rested  upon  that  most  un- 
satisfactory evidence,  the  testimony  of  expert  witnesses 
employed  by  the  parties.  Tbe  city  authorities  acted  in 
good  faith,  and  tliey  tried,  without  success,  to  obtain 
from  the  company  a  statement  of  its  property,  in  capitali- 
zation and  earnings. 

"The  courts,  in  clear  cases,  ought  not  to  hesitat-e  to 
arrest  the  operation  of  a  confiscatory  law,  but  they  ought 
to  refrain  from  interfering  in  cases  of  any  other  kind. 
Regulation  of  public  service  corporations,  which  perform 
their  duties  under  conditions  of  necessary  monopoly, 
will  occur  with  greater  and  greater  frequency  as  time 
goes  on.  It  is  a  delicate  and  dangerous  function,  and 
ought  to  be  exercised  with  a  keen  sense  of  justice  on  the 
part  of  the  regulating  body,  met  by  a  frank  disclosui"e 
on  the  part  of  the  company  to  be  regulated.  The  courts 
ought  not  to  bear  the  whole  burden  of  saving  property 
from  confiscation,  though  they  will  not  be  found  wanting 
where  the  proof  is  clear.  The  legislatures  and  subordi- 
nate bodies,  to  whom  the  legislative  power  has  been  dele- 


208 

gated,  ought  to  do  their  part.  Our  social  system  rests 
largely  upon  the  sanctity  of  private  property,  and  that 
state  or  community  which  seeks  to  invade  it  will  soon 
discover  the  error  in  the  disaster  which  follows.  The 
slight  gain  to  the  consumer,  which  he  would  obtain  from 
a  reduction  in  the  rates  charged  by  public  service  corpo- 
rations, is  as  nothing  compared  with  his  share  in  the  ruin 
which  would  be  brought  about  by  denying  to  private  prop- 
erty its  just  reward,  thus  unsettling  values  and  destroy- 
ing confidence.  On  the  other  hand,  the  companies  to  be 
regulated  Avill  find  it  to  their  lasting  interest  to  furnish 
freely  the  information  upon  which  a  just  regulation  can 
be  based. 

"If  hereafter  it  shall  appear,  under  the  actual  opera- 
tion of  the  ordinance,  that  the  returns  allowed  by  it  oper- 
ate as  a  confiscation  of  property,  nothing  in  this  judg- 
ment will  prevent  another  application  to  the  courts  of  the 
United  States  or  to  the  courts  of  the  State  of  Tennessee. 
But  as  the  case  now  stands  there  is  no  such  certainty  that 
the  rates  prescribed  will  necessarily  have  the  effect  of 
denying  to  the  company  such  a  return  as  would  avoid 
confiscation." 

A  careful  reading  of  the  opinions  of  the  Supreme  Court 
of  the  United  States  in  the  foregoing  reasonable  rate 
cases,  and  applying  the  rules  laid  down  by  the  court,  to 
the  case  of  the  Detroit  United  Kailway,  leads  us  to  the 
following  conclusions. 

(1)  That  a  just  and  fair  valuation  must  be  placed 
on  the  property  of  the  company,  not  at  its  cost,  but  at 
what  it  would,  now  cost  to  reproduce  it,  less  any  actual 
depreciation  as  it  has  annually  occurred,  and  is  likely 
to  occur  in  the  future;  but  which  depreciation  must  be 
added  to  the  operating  expenses  of  the  company.  Any 
unexpired  street  grants  held  by  the  company  must  be 


200 

included  in -the  valuation;  and  a  valuation  must  also  be 
placed  upon  the  franchise  to  maintain  and  operate,  as 
that  franchise  has  become  permanently  attached  to  the 
physical  property,  which  must  be  given  the  value  it  has 
as  a  system  of  street  railways  to  be  maint-jiinefl  and  oper- 
ated, and  not  to  be  destroyed  by  removal  from  the  streets, 
or  by  inadequate  rates  of  fare. 

(2)  That  a  net  income  of  six  x>er  cent  upon  the  value 
of  the  property  thus  ascertained,  would  not  be  r^arded 
as  confiscatory ;  but  in  view  of  the  net  earnings  in  Detroit 
and  Michigan  of  investments  in  banking,  manufacturing, 
merchandizing,  and  newspaper  publishing,  judged  on  a 
strict  cash  basis,  ten  per  cent  on  the  present  cash  value 
of  the  property  would  not  be  excessive  and  would  be  al- 
together just  and  reasonable. 

The  question  of  reasonable  rates  is  primarily  for  the 
authorities  of  the  state,  and  the  courts  of  the  state. 
Where  the  state  law  provides  for  a  determination  of  the 
question  of  reasonableness,  by  an  executive  board  or  com- 
mission, and  permits  a  review  of  its  decisions  by  the 
courts  of  the  state  with  an  appeal  to  the  State  Supreme 
Court,  the  jurisdiction  of  the  federal  courts  to  restrain 
the  imposition  of  confiscatory  rates  should  not  be  invoked 
until  resort  has  been  had  to  the  state  tribunal  and  courts. 
(Prentiss  vs.  Atlantic  Coast  Line,  211  U.  S.,  210.) 

These  decisions  of  the  Supreme  Court  of  the  United 
States  in  rate  cases  bring  one  feature  of  the  federal  juris- 
diction in  such  cases  into  great  prominence. 

That  jurisdiction  can  only  be  sucessfully  invoked  to 
prevent  actual  confiscation,  and  in  the  consideration  of 
that  question  the  federal  courts  are  necessarily  confined 
to  the  property  concerned  as  it  is,  and  cannot  have  re- 
gard for  collateral  matters  which  may  properly  be  given 


210 

consideration  by  the  state  or  local  authorities  when  thej 
determine  a  question  of  reasonable  rates. 

There  is  a  great  deal  of  difference  between  a  public 
service  corporation  which  is  doing  business  on  compen- 
sation which  barely  escapes  from  being  confiscatory,  and 
a  like  corporation  earning  a  liberal  conpensation.  The 
one  must  hold  down  the  wages  of  its  employes  to  the  low- 
est possible  point;  exercise  the  utmost  economy  In  the 
purchase  of  material  and  supplies,  and  in  the  erection 
of  its  buildings  and  plant;  render  just  as  little  and  as 
poor  a  service  to  the  public  as  is  permissible;  and  for- 
bear to  the  limit  from  making  extensions  and  improve- 
ments. 

On  the  other  hand  a  corporation  earning  a  fairly  ade- 
quate compensation,  can  pay  good  living  wages  to  its  em- 
ployes; make  extensions  and  improvements;  and  main- 
tain a  good,  efficient  and  steadily  improving  service;  and 
be  of  great  and  continuous  benefit  to  the  community  in 
which  it  is  located. 

Nothing  could  be  more  detrimental  to  a  growing  and 
progressive  American  city,  than  a  street  railway  corpo- 
ration constantly  on  the  verge  of  bankruptcy-.  Old,  out 
of  date  and  dirty  cars;  rough  tracks  and  battered  rails; 
flattened  wheels,  and  ill-clad  and  overworked  employes, 
are  inevitable  with  a  street  railway  company  whose  rates 
of  fare  just  escape  from  being  denounced  by  the  federal 
judiciary. 

State  authorities  in  fixing,  and  local  authorities  in 
agreeing  to  rates  of  fare,  may  well  prefer  to  establish 
rates,  not  on  an  extravagant,  but  on  a  wholesome  basis, 
such  as  would  encourage  the  street  railway  company  in 
maintaining  and  justify  the  public  in  demanding  and  en- 
forcing a  service  of  ^e  highest  quality  attainable. 

In  every  growing  city,  where  the  population  and  busi- 


211 

ness  of  the  city  and  its  suburbs  is  constantly  increasing, 
the  demand  for  new  street  railways  and  extensions  of  old 
lines,  is  incessant,  and  unless  adequately  remunerated 
and  permanently  secured,  private  capital  will  not  engage 
in  such  undertakigs;  and  public  capital,  managed  by  the 
municipality,  cannot  be  employed,  except  with  the  cer- 
tainty that  the  service  will  not  be  as  good  and  will  be 
more  expensive  to  the  public,  than  that  of  a  private  cor- 
poration. 

During  the  street  railway  agitation  in  Detroit  there 
has  not,  for  about  thirteen  ^-ears,  been  any  construction 
of  new  lines  or  extensions  within  the  city.  Some  exten- 
sions and  improvements  have  been  made  in  the  suburbs, 
but  these  were  made  under  grants  from  suburban  town- 
ships and  villages  and  not  under  city  grants. 

A  number  of  nerw^  lines,  and  a  rearrangement  of  the 
existing  system,  is  now  a  prime  necessity,  and  an  ade- 
quate terminal  station  for  the  interurban  lines  is  of  the 
utmost  importance  to  the  business  interests  of  the  city, 
AVhich  have  been  so  greatly  promoted  and  advanced  by 
the  interurban  traffic  and  can  be  still  further  benefited 
by  an  up  to  date  service. 

It  is  safe  to  say  that  ten  millions  of  dollars  should  be 
invested  in  permanent  street  railway  improvements  in 
the  immediate  future. 

Now,  turn  into  the  question  of  reasonable  rates,  as 
good  law,  the  contention  that  at  the  expiration  of  a 
street  grant  the  street  railway  company  must  submit  to 
the  option  of  getting  out  of  the  streets,  or  of  accepting 
ruinous  rates  of  fare,  and  does  it  not  become  perfectly 
clear,  that  a  street  railway  company  must  build  up  a 
sinking  fund  equal  to  the  then  value  of  its  property,  less 
only  the  value  of  that  prox)erty  as  ju§k  removed  from  the 
streets;  or  ran  the  risk  of  being  unable  to  pay  its  bonds 


212 

and  other  indebtedness,  and  of  making  no  return  what- 
ever to  its  stockholders. 

How  can  any  person  of  plain,  ordinary  understanding 
seriously  and  in  good,  faith  contend  that  the  street  rail- 
ways of  Detroit  have  been  in  the  past  and  should  be  in 
the  future,  constructed  and  operated  upon  a  legal  theorv- 
so  utterly  destructive  to  the  actual  investments  therein, 
and  such  a  complete  and  absolute  barrier  to  the  low  rates 
of  fare  which  have  so  far  prevailed. 

With  such  a  theory  established  as  the  law  in  Michigan 
it  is  a  certainty  that  the  Supreme  Court  of  the  United 
States  would  hold  enforced  five  cent  fares  to  be  confis- 
catory and  a  deprivation  of  property  without  due  process 
of  law. 

The  report  of  the  Comptroller  of  the  Currency  for 
1908,  shows  that  the  net  earnings  of  the  national  banks 
of  the  United  States,  on  a  cash  capital  of  |893,932,010 
were  |131,335,288,  or  14.69  per  cent;  and  that  the  divi- 
dends actually  paid  were  $97,336,282,  or  10.89  per  cent. 

State  banks,  reporting  their  dividends  to  the  comp- 
troller, paid  in  1908,  dividends  of  10.19  per  cent;  loan 
and  trust  companies  paid  10.08  per  cent;  and  private 
banks  paid  13.57  per  cent. 

It  is  well  knowm  that  the  net  earnings  of  the  national 
and  state  banks  and  the  trust  companies  of  Detriot,  ex- 
ceed the  above  averages. 

The  stove  companies  in  Detroit  have  paid  more  than  10 
per  cent  for  years,  and  in  addition  each  company  has 
accumulated  a  large  surplus,  justifying  stock  dividends 
in  addition  to  the  regular  dividends.  Other  manufactur- 
ing companies,  and  mercantile  corporations,  have  been 
equally  successful.    • 

No  business  enterprise  in  Detroit  would  be  regarded 


213 

as  a  success  if  it  did  not  earn  net,  10  per  cent  of  the 
capital  actually  invested. 

The  business  which  more  nearly  resembles  that  of  a 
public  service  corporation  is  the  business  of  publishing  a 
newspaper. 

It  is  similar  to  that  of  a  telegraph  or  telephone  com* 
pany,  which  transmits  written  or  oral  messages.  A  news- 
paper corporation  conveys,  transmits  and  carries  news, 
advertisements  and  literary  matter,  including  editorial 
comments,  propaganda  and  sermons,  all  of  more  or  less 
value  to  the  general  public. 

In  the  absence  of  a  statute  making  them  such,  tele- 
graph and  telephone  companies  are  not  in  Michigan  re- 
garded as  common  carriers.  (Birket  vs.  Telegraph  Co.. 
103  Mich.  261.) 

But  the  legislature  can  make  them  common  carriers, 
and  it  has  enacted  many  provisions  regulating  them. 
How  would  the  owners  of  our  newspapers  like  to  have 
their  business  subjected  to  the  control  of  a  state  commis- 
sion, with  power  to  reduce  their  net  earnings  to  6  per 
cent  of  the  actual  cash  value  of  their  physical  property, 
or  the  money  actually  invested. 

They  make  great  use  of  the  railroads,  telegraph  and 
telephone  lines,  and  perform  a  public  service  of  the  same 
general  character.  The  street  railways  of  Detroit  have 
been  of  as  much  benefit  to  our  newspaper  corporations 
as  they  have  been  to  any  other  interest  in  the  community, 
and  there  is  quite  as  much  need  of  regulating  their 
charges  for  advertisements,  as  there  is  need  of  regulating 
the  charges  of  other  corporations  engaged  in  serving  the 
public. 

There  are  no  published  reports  showing  either  the 
gross  or  the  net  earnings  of  our  newspapers,  but  they  are 
known  to  be  very  large.    More  than  100  per  cent  on  the 


2U 

cash  capital  actually  invested  is  not  uncommon  among 
them. 

Under  the  constitutional  guaranties  which  prevail  in 
the  United  States,  it  is  not  competent  for  state  legisla- 
tures or  congress  to  regulate  prices  for  a  purely  private 
business;  but  the  line  between  that  which  is  private,  and 
that  which  is  public  is  not  clearly  drawn.  Under  mod- 
ern conditions  many  things  which  have  been  heretofore 
regarded  as  private,  have  been  charged  with  a  public  in- 
terest, warranting  governmental  interference. 

The  business  of  the  Standard  Oil  Company  may  be 
regarded  as  purely  private,  but  its  pipe  lines  have  in 
some  of  the  states  been  declared  common  carriers,  and  the 
Michigan  statute,  for  the  incorporation  of  pipe  line  com- 
panies for  the  transportation  of  brine  expressly  makes 
such  companies  common  caiTiers.  (2  C.  L.  1897,  Sec. 
64^7,  suhd.  7.) 

It  would  be  difficult  to  define  the  limits  of  the  power  of 
our  governments  to  fix  prices;  but  it  is  certain  that  many 
things  which  have  not  yet  been  touched,  are  within  that 
power,  and  will  be  subjected  to  it  when  the  public  inter- 
ests make  it  necessary. 

It  would  be  easy  to  extend  the  present  limits  of  gov- 
ernmental interference  so  as  to  include  newspaper  cor- 
porations as  common  carriers  of  news,  advertisements 
and  mental  pabulum. 

There  should  be  no  governmental  regulation  of  private 
enterprises  except  in  the  face  of  a  supreme  necessity,  and 
then  the  action  of  the  government  should  be  direct,  firm 
and  decisive. 

Our  newspaper  friends  are  safe  for  many  years,  but 
that  does  not  change  the  fact  that  the  newspaper  corpo- 
rations of  the  present  day,  are  but  little  if  any  different 


215 

from  such  as  are  universally  regarded  as  public  service 
corporations. 

It  may  be  urged  that  a  newspaper  is  not  a  monopoly, 
as  anyone  can  enter  into  that  business;  but  the  truth 
is  a  newspaper  with  an  old  established  circulation  has 
the  greatest  kind  of  a  monopoly;  no  one  can  disturb  it; 
it  would  take  many  millions  of  dollars  to  supplant  the 
Detroit  Evening  News  or  the  Detroit  Free  Press,  if  it 
could  be  done  at  all.  Further  than  that  our  leading 
newspapers  have  press  associations  which  are  openly  and 
avowedly  maintained  as  monopolies. 

Where  a  street  railway  company  is  under  the  risk  of 
having  its  property  destroyed  by  being  compelled  to  re- 
move from  the  streets  or  to  accept  inadequate  rates  of 
fare,  it  is  certainly  entitled  to  deduct  from  its  net  earn- 
ings over  and  above  operating  expenses,  a  sufficient  an- 
nual percentage  to  build  up  a  sinking  fund  to  restore 
the  investment  in  its  capital  stock  and  to  pay  its  bonded 
and  other  indebtedness  in  full. 

The  courts  of  Ontario,  and  the  learned  judges  of  the 
privy,  council  in  England  have  had  occasion  to  consider 
a  similar  case.  (International  Bridge  Company  vs.  Can- 
ada Southern  R.  R.  Co.,  8  Ont.  App.  226 ;  S.  C.  S  Appeal 
Cases,  723.) 

In  that  case  the  tolls  of  the  bridge  company  were  at- 
tacked by  the  railroad  company  as  unreasonable,  and  it 
appeared  that  the  net  earnings  were  as  much  as  15  per 
cent. 

But  it  further  appeared  that  the  bridge  was  liable  to  be 
swept  away  or  destroyed,  in  whole  or  in  part,  as  the  Tay 
bridge  was,  and  it  was  held  that  the  bridge  company  was 
entitled  to  build  up  a  sinking  fund.  The  Ontario  court 
said 

"To  speak  of  six  per  cent  upon  capital  laid  out  in 
such  an  enterprise,  is  most  unreasonable." 


216 

Eeasonable  rate  cases  in  the  United  States  have  only 
concerned  permanent  investments  and  the  question  of 
building  up  a  sinking  fund  to  preserve  tlie  investment, 
has  not  been  presented;  but  it  has  been  mentioned  in  two 
cases  in  Pennsylvania,  one  of  which  concerned  the  plant  of 
a  water  company,  and  the  other  a  steam  railroad.  {Bry- 
mer  vs.  Butler  Water  Co.,  179  Pa.  St.,  231 ;  Penna.  R.  R. 
Co.  vs.  Phila.  County,  220  Pa.,  100.) 

In  the  case  of  the  Pennsylvania  Railroad  company  it 
appeared  that  the  company  had  $53,600,598.74  invested 
in  its  intrastate  passenger  business,  of  which  |21,051,- 
795.96  represented  mortgage  or  otherwise  funded  indebt- 
edness, giving  rise  to  an  annual  interest  charge  of  |894,- 
701.33;  and  |32,548,802.74  represented  the  amount  of 
money  contributed  by  the  stockholders,  plus  the  amount 
set  aside  from  surplus  earnings  in  past  years. 

The  Pennsylvania  Railroad  Company  was  incorporated 
in  1846,  and  under  the  rates  of  fare  it  was  charging,  the 
stockholders  investment  of  132,548,802.78  was  earning  5.1 
per  cent. 

The  legislature  passed  an  act  reducing  its  rates  of  fare 
to  two  cents  per  mile,  which  it  was  found  would  reduce 
the  eamigs  of  the  stx)ckholders  to  1.94  per  cent. 

Held  that  tlie  act  of  the  legislature  was  confiscatory 
and  unconstitutional. 

At  pages  114,  115,  the  court  said : 

"The  court  below  conceded  the  general  rule  and  held 
that  "any  attempt  by  the  legislature  at  the  regulation  of 
charges  is  presumptively  reasonable.  The  burden  of  dem- 
onstrating the  unreasonableness  lies  on  him  who  objects 
to  the  regulation  enacted."  And  further:  "Public  service 
corporations  in  Pennsylvania  are  entitled  to  look  for  a 
rate  of  return,  if  their  property  will  earn  it,  not  less 
than  tlie  legal  rate  of  interest,  and  a  system  of  charges 


217 

that  yields  no  more  income  than  is  fairly  requisite  to 
maintain  the  plant,  pay  fixed  charges  and  operating  ex- 
penses, provide  a  suitable  sinkim,g  fund  for  the  payment 
of  debts  and  pay  a  fair  profit  to  the  owners  of  the  prop- 
erty cannot  be  said  to  be  unreasonable.  Brymer  vs.  But- 
ler Water  Co.,  179  Pa.,  231."  In  so  holding  the  court 
committed  no  error  of  which  the  appellant  can  complain. 
The  presumption  in  favor  of  the  prescribed  rate  is  no 
more  than  the  ordinary  presumption  in  favor  of  the  con- 
stitutionality of  the  acts  of  assembly.  It  has  no  special 
strength  or  sanctity,  and  in  view  of  the  public  history  of 
the  passage  of  the  act  of  1907  without  investigation  and 
in  obedience  to  a  popular  agitation  for  the  same  rate  not 
only  in  Pennsylvania  but  over  the  whole  country,  it  might 
be  said  that  very  slight  evidence  would  rebut  the  pre- 
sumption in  this  case. 

"What  was  said  in  Brymer  vs.  Water  Co.;,  179  Pa., 
231,  was  that  the  company  was  entitled  to  a  fair  return, 
not  less  than  the  legal  rate  of  interest.  In  naming  the 
legal  rate  the  court  was  naming  a  minimum,  not  maxi- 
mum, rate.  Six  per  cent  is  the  legal  estimate  of  the  legit- 
imate profit  from  the  ordinary  safe  use  of  money.  No 
business  man  in  1846,  even  if  now,  went  into  a  new  and 
extensive  venture  of  uncertain  outcome  without  the  hope 
of  more  than  common  interest.  Because  his  judgment  o^ 
foresight  was  good  is  no  reason  that  he  should  be  shorn 
of  his  profits  in  the  result.  What  is  a  fair  profit  is  a  com- 
plicated and  difficult  question,  but  there  are  certain  ele- 
ments that  are  plainly  to  be  regarded  to  avoid  injustice, 
such  as  the  original  investment,  the  risks  assumed  at  that 
time,  the  returns  as  compared  with  other  enterprises  as 
nearly  similar  as  may  be,  the  cost  of  maintenance  and 
improvement,  the  prospects  of  increase  and  the  present 
value  in  view  of  the  preceding  elements.  Injustice  is 
done  by  anything  that  fails  to  consider  these,  and  to  deal 
equitably  with  the  private  as  well  as  the  public  interests 


218 

involved.  It  is  not  necessarily  r^ulated  by  what  others 
would  now  make  the  venture  for,  under  the  present  cir- 
cumstances and  with  present  knowledge.  The  public  hav- 
ing long  reaped  the  incidental  profits  from  the  develoj)- 
ment  of  the  country  by  the  enterprise  and  venture  of  cap- 
ital, in  the  increased  value  of  land,  the  opening  of  new 
and  wider  markets  for  crops  and  manufactures  and  the 
facility  of  intercourse  and  exchange  for  persons  and 
property,  the  courts  should  not  now  ignore  this  aspect 
of  the  subject  in  considering  the  question  of  injustice  to 
the  corporators.  In  view  of  the  evidence  before  the  court 
and  the  proper  elements  with  which  it  must  be  considered 
the  court  below  certainly  did  not  err  against  the  appel- 
lant in  finding  that  the  statutory  rates  of  fare  would  do 
injustice  to  the  corporators." 

The  sinking  fund  recognized  by  the  Pennsylvania  court 
was  for  the  purpose  of  building  up  a  fund  to  pay  the 
bonded  debt  of  the  company,  but  any  reduction  in  that 
debt  would  be  a  reduction  of  the  capital  invested  and 
cause  a  corresponding  decrease  in  the  annual  cliarges  for 
interest. 

That  kind  of  a  sinking  fund  is  one  of  prudence  to  en- 
able the  company  to  pay  its  bonded  indebtedness  or  some 
portion  of  it  at  maturity,  in  case  of  any  difficulty  in  mak- 
ing a  renewal  of  the  loan.  It  is  not  a  sinking  fund  to 
protect  the  property  from  destruction,  by  dismantling  it 
or  by  inadequate  rates  of  fare  forced  upon  the  company. 

The  Detroit  United  Railway,  has  a  capital  investment 
of  125,000,000  equally  divided  into  a  stock  issue  and  a 
bonded  indebtedness  of  $12,500,000  each.  If  the  company, 
whenever  its  local  contracts  fixing  rates  of  fare  have  ex- 
pired, and  it  is  operating  its  street  railways  without  any 
such  contract,  is  subject  to  adverse  municipal  action  com- 
pelling it  to  remove  from  the  streets  or  to  charge  ruinous 


219 

rates  of  fare,  it  is  entitled,  on  any  view  that  can  be  taken 
of  the  risk,  to  set  a  part  for  the  purposes  of  a  sinking  fund, 
as  much  as  |1,000,000  a  year;  and  any  additions  to  the 
cash  capital  invested  should  be  safeguarded  in  the  same 
way. 

The  Cleveland  street  railway  ordinance  of  December 
18,  1909,  guards  against  any  such  destruction  of  the  prop- 
erty, and  in  that  connection  provides  for  a  sinking  fund. 
The  city  reserves  the  right  to  purchase  the  property 
at  its  capital  value,  plus  ten  per  cent;  it  also  reserves 
the  right  after  January  1,  1918,  to  designate  a  purchaser 
of  the  property,  on  the  same  terms;  and  if  the  grant  ex- 
pires and  is  not  renewed,  and.  the  city  makes  a  grant  to 
another  company,  that  company  is  required  to  purchase 
the  property  on  the  same  terms  as  the  city  might  have 
purchased  it. 

When  the  grant  lias  less  than  fifteen,  years  to  run  the 
company  is  authorized  to  charge  the  maximum  rates  of 
fare,  of  four  cents  cash  fare,  seven  tickets  for  twenty-five 
cents,  and  one  cent  transfer,  no  rebate;  and  the  sui'plus 
earnings  are  to  be  applied  (1)  to  the  payment  of  floating 
indebtedness;  (2)  the  payment  of  any  outstanding  bonds 
which  can  be  paid,  and  (3)  by  creating  a  sinking  fund 
to  assist  in  securing  a  reduction  of  capital  value,  in  case 
the  city  or  its  licensee  or  grantee  should  purchase  the 
property. 

The  Cleveland  ordinance  is  wisely  designed  to  prevent 
the  city  from  exercising  at  tlie  expiration  of  the  gi'ant, 
that  arbitrary  and  confiscatory  power,  it  is  supposed  to 
possess  under  tJie  laws  of  Ohio.  It  is  a  better  construc- 
tion of  those  laws  than  that  of  the  state  and  federal 
courts  in  the  case  of  the  Inclined  Plane  Railroad  Com- 
pany, and  it  is  to  the  credit  of  Mayor  Tom  L.  Johnson 
that  he  wound  up  his  administration  by  consenting  to  and 
approving  it. 


220 

The  law,  like  everything  else,  is  evolutionary  in  its 
nature.  At  times  it  may  he  a  laggard,  but  eventually  it 
reaches  the  truth  and  justice. 

The  Cleveland  ordinance  is  a  practical  precedent  of  in- 
estimable value  to  the  i)eople  of  Ohio;  but  it  has  one  fea- 
ture of  great  danger  to  the  street  railway  company. 

It  is  more  than  likely  that  under  the  provisions  of  the 
ordinance  for  an  automatic  adjustment  from  time  to  time 
of  the  rates  of  fare,  the  maximum  rates  will  be  reached 
before  the  first  ten  years  of  the  twenty-five  year  grant 
has  expired,  and  that  they  will  not  be  sufficient  to  main- 
tain such  a  street  railway  service  as  the  city  is  entitled 
to  have  and  demand.  The  company  is  bound  by  its  con- 
tract, and  it  may  become  financially  embarrassed  long  be- 
fore the  property  is  purchased  by  the  city,  its  licensee  or 
grantee,  to  the  great  injury  and  loss  of  its  stockholders. 

In  the  presidential  campaign  of  1896  I  had  occasion  to 
publish  a  series  of  tables  designed  to  show  the  extent  to 
which  the  relative  shortage  for  a  number  of  years  in  the 
worlds'  production  of  gold,  had  enhanced  the  value  or 
purchasing  power  of  that  metal  and  made  a  corresponding 
reduction  in  the  prices  of  all  the  staple  crops  of  American 
farms. 

I  made  mj  comparison  with  a  table  of  the  prices  of  22 
farm  products  prevailing  in  Chicago  July  1,  1874,  and  a 
similar  table  of  the  prices  in  Chicago  July  1,  18%,  and 
found  that  gold  had  appreciated  about  105  per  cent. 

July  1,  1901,  I  published  a  table  of  prices  then  prevail- 
ing and  it  showed  that  the  purchasing  power  of  gold  had 
receded  so  that  it  was  only  26  1-2  per  cent  greater  than 
it  was  in  1874.    In  that  connection  I  said : 

"The  annual  production  of  gold  is  now  more  than  |300,- 
000,000  with  the  prospect  that  each  succeeding  year  will 
see  a  substantial  increase,  and  in  my  judgment  it  indi- 


221 

cates  that  we  are  at  the  threshold  of  the  greatest  era  of 
prosperity  the  world  has  ever  seen." 

As  a  matter  of  fact  the  annual  production  of  gold  has 
steadily  increased,  and  in  1909  it  reached  the  enormous 
sum  of  1450,000,000  with  every  indication  that  by  1912 
it  will  be  1500,000,000. 

As  gold  is  practically  imperishable,  only  a  small  x>or- 
tion  of  it,  being  actually  consumed,  destroyed  or  lost,  the 
production  each  year  increases  the  worlds'  stock  of  that 
metal  which  greatly  decreases  its  value  or  purchasing 
power ;  and  it  will  continue  to  do  so,  as  long  as  the  quan- 
titative theory  of  money,  and  the  law  of  supply  and  de- 
mand rule  the  economic  world,  and  the  increased  produc- 
tion of  gold  continues.  I  am  not  a  prophet  or  the  son 
of  a  prophet,  but  I  now  predict  that  we  are  only  on  the 
eve  of  higher  prices.  There  does  not  appear  to  be  any 
way  of  stopping  it.  The  exertable  power  of  all  the  gov- 
ernments in  the  world  is  not  equal  to  the  exigencies  of 
the  situation. 

During  the  second  administration  of  President  Cleve- 
land, bonds  were  issued  under  the  obsolete  resumption 
act,  to  keep  a  reserve  fund  in  the  treasury  of  $50,000,000, 
and  now  there  is  over  $1,000,000,000  in  the  vaults,  the 
greater  part  of  wliich  is  in  circulation  in  the  form  of  gold 
certificates  or  yellow  backs. 

The  best  evidence  of  the  effect  on  prices  of  the  in- 
creased production  of  gold  will  be  found  in  the  third  of 
the  tables  set  forth  in  the  appendix.  It  shows  that  since 
1896  gold  has  depreciated  in  value  over  50  per  cent,  caus- 
ing a  rise  of  prices  of  100  per  cent. 

There  is  only  one  restraining  influence.  Inflation  feeds 
on  itself;  it  produces  gi*eat  business  and  productive  ac- 
tivity, which  over-leaps  itself,  and  a  set  back  becomes  in- 


222 

evitable.  Such  was  the  financial  depression  of  1907.  The 
peculiar  thing-  about  that  "panic,"  was  that  it  had  but 
little  effect  on  the  general  business  of  the  country,  and 
did  not  produce  a  general  fall  in  prices;  indeed,  some  of 
the  more  staple  productions,  actually  increased  in  prices. 

It  is  proposed  to  remedy  the  alleged  evil  of  such  set- 
backs by  authorizing  an  emergency  currency,  which,  how- 
ever, is  more  likely  to  prove  a  permanent  inflation  rather 
than  a  temporary  one. 

If  a  greater  volume  of  circulating  medium  is  necessary, 
gold  can  be  purchased  in  the  markets  of  the  worlds  de- 
posited in  the  treasury  and  gold  certificates  obtained  for 
it.  That  is  the  only  kind  of  inflation  needed,  and  it  would 
have  a  restraining  influence  on  the  increase  in  prices;  not. 
enough,  however,  to  prevent  a  gradual  rise,  as  long  as  the 
deluge  of  gold  continues. 

Like  all  other  employes,  those  of  a  street  railway  must 
have  wages  sufficient  to  feed,  clothe  and  shelter  them; 
and  this  element  in  the  operation  of  street  railways  may 
have  a  very  serious  effect  on  their  finances  in  the  near 
future,  accompanied  as  it  will  be,  by  an  equal  rise  in  the 
prices  of  all  material  and  supplies  entering  into  construc- 
tion, maintenance  and  repairs. 

Whatever  merit  the  agitation  for  three-cent  fares  may 
have  possessed  in  the  nineties  has  been  absolutely-  oblit- 
erated; and  the  end  of  the  upward  tendency  in  prices  is 
not  yet  in  sight. 

The  Cleveland  street  railway  ordinance  was  borrowed 
in  part  from  the  laws  of  Indiana. 

The  Supreme  Court  of  the  Uniticd  States  in  deciding 
the-  Indianapolis  street  railway  case,  (166  U.  S.,  557), 
having  declined  to  express  an  opinion  on  the  question 
whether  the  local  grant  extended  beyond  the  designated 


223 

term  of  thirty-seven  years,  that  question  remained  unset- 
tled until  it  was  disposed  of  by  the  state  legislature. 

At  the  next  ensuing  session  of  the  legislature,  an  act, 
approved  March  5,  1897,  provided  that  in  any  city  having 
a  population  of  more  than  100,000  inhabitants,  the  local 
grants  should  expire  at  the  time  designated,  and  the  right 
of  the  grantee  to  remadn  in  the  streets  should  cease;  but 
it  was  further  provided  that  at  or  before  the  expiration 
of  the  contract  period,  the  city  should  open  to  free  com- 
petition the  further  occupancy  of  the  streets  for  thirty 
j-ears,  and  if  the  occupying  company  was  not  the  success- 
ful competitor,  the  new  or  other  company,  which  was  suc- 
cessful, could  not  take  possession  of  the  streets,  until  it 
had  condemned  the  street  railway  property  of  the  old 
company  to  the  public  use  and  had  paid  to  the  old  com- 
pany the  appraised  value  of  its,  property  as  ascertained 
in  the  condemnation  proceedings.  (Laws  of  Ind.  1897,  p. 
154.) 

Another  act,  approved  March  6,  1897,  fixed  the  rate  of 
fare  at  three  cents,  with  a  right  to  a  transfer.  {Id.,  p. 
201). 

The  three-cent  fare  law  was  attacked  in  the  state  courts, 
not  on  the  ground  that  the  rate  was  inadequate,  but  on 
the  ground  that  the  legislature  had  no  power  to  impair 
the  terms  of  local  grants  Avhich  had  not  expired.  The  state 
Supreme  Court  held  the  act  valid  as  within  the  power 
to  amend  or  repeal.  (City  of  Indianapolis  vs.  Navin,  151 
Ind.,  139.) 

The  United  States  Circuit  Court  held  the  act  invalid 
on  another  ground,  not  agreeing  thereon,  with  the  state 
court.  {Central  Trust  Co.  vs.  Citi^sens  Street  R.  Co.,  80 
Fed.,  218.) 

An  appeal  to  the  United  States  Circuit  of  Api>eals  was 
dismissed  on  the  jurisdictional  ground  that  the  question 


224 

of  impairment  of  contract  should  have  been  appealed  to 
the  Supreme  Court  of  the  United  States.  {Citi/  of  In- 
dian<ipoUs  vs.  Central  Trust  Co.,  83  Fed.,  529.) 

The  state  legislature  again  intervened  ajid  passed  the 
act  of  March  3,  1899,  which  fixes  the  rates  of  fare  at  five 
cents  for  a  single  cash  fare,  with  transfer;  six  tickets  for 
twenty-five  cents;  and  twenty-five  tickets  for  one  dollar, 
with  transfers. 

The  city  is  given  the  right  to  purchase  the  property 
at  any  time  within  two  years  and  not  later  than  one  year, 
before  the  expiration  of  the  local  contract,  and  if  the 
city  and  company  are  nnable  to  agree  on  the  value  of  the 
property,  the  cdty  may  institute  condemnation  proceedings 
to  fix  the  value. 

If  the  local  grant  expires,  and  a  renewal  has  not  been 
granted,  and  a  new  or  other  company,  on  free  and  open 
competition,  is  the  successful  bidder,  it  must  condemn 
and  pay  for  the  property  of  the  occupying  company  as 
under  the  act  of  1897.     {Lcms  of  Ind.,  1899,  p.  260.) 

The  above  act  is  still  in  force.  (2  Burns'  Anno.  In- 
diana Statutes,  1908,  Sec.  5648-5657,  see  sec.  5665.) 

It  has  been  sustained  as  constitutional.  {Smith  vs  In- 
dianapolis Street  Railway  Co.,  158  Ind.,  425.) 


225 


XIII. 

"No  more  public  service  franchises  on  any  terms, 
and  the  termination  of  all  existing  grants  at  the 
earliest  possible  date. 

"Government  by  the  people,  and  not  by  private 
corporations.'' 

One  of  the  leading  newspapers  of  Detroit  has  had  the 
al)Ove  motto  or  legend  at  the  head  of  its  editorial  columns 
for  a  long  time.  I  want  to  express  my  entire  approval 
of  it,  and  endorsement  of  every  idea  or  sentiment  con- 
tained in  it;  but  perhaps  not  quite  in  the  same  sense  it  is 
understood  by  the  authors  of  it,  or  by  some  who  have 
read  it 

Government  by  the  people,  does  not  in  this  country 
mean  the  mere  unrestrained  will  of  the  people.  The  peo- 
ple themselves  have  adopted  a  constitution,  which  divides 
the  government  into  three  branches  or  principal  depart- 
ments, the  legislative,  executive  and  judicative.  The  judi- 
cial is  as  much  a  part  of  government  by  the  i)eople  as  the 
legislative  or  executive.  In  addition  to  this  division  of 
the  powers  of  government  the  people  in  their  constitution 
have  placed  certain  restrictions  on  all  the  departments, 
and  on  themselves,  among  others,  that  no  person  shall 
be  deprived  of  his  life,  liberty  or  property  without  due 
process  of  law,  and  they  have  made  it  the  particular  duty 
of  the  judiciary  to  see  that  this  restriction  is  observed  and 
enforced. 

This  is  government  by  the  people  as  it  exists  in  the 
United  States.  It  is  not  government  by  the  mere  will  or 
caprice  of  majorities,  but  by  sound,  sensible  and  imper- 


226 

ative  law.     It  is  not  government  by  editorial  opinion,  or 
by  temporary  outbursts  of  popular  feeling. 

In  its  true  meaning  the  government  by  the  people  clause 
of  tJie  motto  of  the  Evening  News  is  absolutely  correct. 
The  public  service  franchises  mentioned  are  contracts  fix- 
ing for  a  long  or  short  period  the  rates  of  fare  or  prices 
to  be  charged  by  the  grantee.  These  contracts,  if  they 
are  for  any  considerable  length  of  time,  are  objectionable, 
because  they  may  become  very  burdensome  to  one  or  the 
other  of  the  parties,  without  any  possible  chance  for  re- 
lief. The  Supreme  Court  of  the  United  States  has  re- 
cently upheld  a  contract  of  the  City  of  Minneapolis  for 
fifty-years.     {Advance  Sheets,  Feb.  1,  1910,  p.  118.) 

It  is  good  advice  to  give  to  municipalities  and  to  pub- 
lic service  corporations,  do  not  make  any  long-time  con- 
tracts, but  leave  the  rates  of  fare,  or  prices,  to  be  deter- 
mined from  time  to  time,  on  common  law  principles,  as 
changes  in  economic  conditions,  in  the  one  direction  or 
the  other,  actually  occur.  That  is  the  only  safe,  sound 
and  just  way  of  handling  so  troublesome  a  question. 

The  Supreme  Court  of  the  United  States  has  always 
been  very  careful  not  to  make  any  permanent  decrees  in 
rate  cases,  but  has  invariably  left  it  open  to  either  of  the 
parties,  to  make  a  new  application  to  the  trial  court  in 
case  the  rates  sustained  by  the  court  prove  to  be  inade- 
quate or  excessive. 

WTiat  could  be  more  in  harmony  with  the  American 
regard  for  fair  play  and  equal  and  exact  justice? 

Some  of  the  street  grants  of  the  Detroit  United  Rail- 
way have  expired,  and  others  will  expire.  Is  it  good  sense 
on  the  part  of  the  city  or  the  companj-  to  continue  the 
policy  of  making  long  time  contracts,  to  become,  in  course 


227 

of  time,  subjects  of  dissatisfaction  and  controversy?  The 
automatic  adjustment  of  fares  provided  for  in  the  Cleve- 
land street  railway  ordinance  will  become  a  matter  of 
legal  controversy  to  be  settled  by  Judge  Tayler  or  some 
other  good  judge,  and  it  would  have  been  better  to  have 
left  the  question  of  reasonable  fares  wide  open,  for  judi- 
cial action  whenever  there  is  any  occasion  to  revise  the 
rates. 

This  is  no  idle  dream ;  it  is  plain  'and  simple  common 
sense;  and  the  Evening  News  is  right  when  it  says,  "No 
more  public  service  franchises." 

If  its  learned  and  accomplished  editors,  or  any  other 
citizens,  or  the  city  itself,  are  of  the  opinion  that  the 
rates  of  fare  now  1>eing  charged  by  the  Detroit  United 
Railway  are  excessive,  the  courts  are  open  to  them,  with 
a  certainty  that  they  will  be  given  a  full  and  fair  hearing, 
and  as  just  a  decision  as  is  attainable  by  any  known 
means  of  adjusting  matters  of  dispute  and  controv'^ersy. 
The  decisions  of  the  courts  are  far  from  being  always 
right,  but  the  judiciary  is  the  result  of  many  centuries 
of  human  experience,  and  the  tendency  among  all  the 
more  civilized  nations  is  to  settle  their  disagreements  by 
arbitration.  Eventually  there  will  be  a  great  international 
court,  which  will  exist  and  have  jurisdiction  for  that  very 
purpose. 


228 


XIV. 

One  of  the  great  merits  of  requiring  or  permitting 
street  railway  corporations  to  maintain  and  operate 
their  railways  subject  only  to  the  legal  obligation  to 
charge  reasonable  faires,  is,  that  it  does  away  with 
the  real  and  pretended  reeisons  for  municipal  owner- 
ship. 

The  ownersihip  and  operation  of  street  railways  by 
municipalities  can  have  but  one  or  both  of  two  objects: 
(1)  To  secure  the  same  service  a  private  corporation 
would  render  for  less  cost  to  the  public;  or  (2)  to  secure 
a  better  service  for  the  same  cost. 

The  best  service  attainable  at  the  lowest  possible  cost 
is  the  thing  that  is  desired,  and  is  much  more  desirable 
than  a  poorer  service  at  less  cost.  At  the  inception  of  a 
street  railway  enterprise,  a  long  time  contract  may  be 
advisable  to  enable  the  grantee  to  apply  its  surplus 
earnings  to  extending  and  building  up  a  street  railway 
system.  Such  was  the  history  of  the  old  DetJX)it  City 
Railway  under  its  thirty  year  contracts.  The  city  and 
the  public  got  the  service  wanted,  which  was  the  consider- 
ation for  the  grants,  and  made  them  inviolable  contracts. 

When  the  Detroit  United  Eailway  acquired  the  prop- 
erty it  got  the  tail-end  of  a  number  of  the  grants,  among 
them  those  on  four  of  the  most  important  streets  in  the 
city,  Jefferson,  Woodward,  Gratiot  and  Michigan,  but  it 
continued  the  policy  of  maintaining  and  improving  the 
property  and  not  allowing  it  t.o  deteriorate  in  efficiency 
or  value. 


229 

Now,  that  these  grants  have  expired,  and  the  property 
is  in  good  working  condition,  and  only  needs  to  be  fur- 
ther improved,  and  a  few  new  lines  and  extensions  built, 
here  and  there,  a  contract  for  any  considerable  length  of 
time,  would,  as  a  business  proposition,  be  ridiculous,  for 
it  would  more  than  likely  prove  injurious  and  burdensome 
to  one  or  the  other  of  the  parties,  before  the  contract 
period  expired.  The  longer  the  contract  period,  the  more 
likely  it  is,  that  a  serious  change  in  economic  and  other 
conditions  will  occur. 

All  the  sentiment  there  is  in  United  States  in  favor  of 
municipal  ownership  has  been  created  by  these  long-time 
contracts.  The  greater  portion  of  those  who  believe  in 
municipal  ownership,  think  it  is  the  only  way  to  get  rid 
of  such  contracts.  A  contract  for  twenty-four  months 
is  to  be  preferred  to  one  for  twenty^four  years,  but  what 
is  better  yet  is  no  contracts  whatever  fixing  rates  of  fare. 

The  private  ownership  and  operation  of  street  railways 
on  such  a  plan  has  great  advantages  over  municipal  o\vn- 
ership. 

(1)  It  would  enable  the  public  to  have  the  benefit  of 
private  management  and  control,  which  is  universally 
more  economical  and  efficient  than  that  of  public  officials. 
The  public  would  also  have  the  benefit  of  private  enter- 
prise in  making  betterments  and  improvements  in  tracks, 
power  plants,  and  equipment.  In  short  the  public  would 
get  the  benefit  of  the  best  service  for  the  least  cost. 

(2)  Whenever  the  privately  owned  company  was  earn- 
ing too  much  money  the  rates  of  fare  could  be  reduced, 
and  when  it  was  not  earning  enough  to  keep  up  with  the 
advance  in  improved  means  and  facilities  for  rendering 
the  most  efficient  service,  the  rates  could  be  increased. 

(3)  Street  railway  wars  and  controversies  would  be 
eliminated  from  municipal  politics,   whereas  municipal- 


230 

ized  street  railways  would  be  a  subject  of  interminable 
controversy  in  tlie  conduct  of  municipal  affairs.  Take 
the  one  matter  of  new  lines  and  extensions,  witb  the  pub- 
lic treasury  open  for  their  realization.  How  could  an  or- 
dinary common  council  be  held  in  suflflcient  restraint,  and 
how  many  real  estate  speculations  would  be  exploited  in 
the  outlying  wards  and  nearby  territory.  Here  is  where 
the  restraints  resting  on  private  enterprise  and  private 
capital  would  be  particularly  valuable. 

(4)  Under  the  manhood  suffrage  which  prevails  in 
the  United  States,  the  electors  in  a  city  would  be  divided 
in  two  classes  with  opposing  interests.  The  taxpayers  of 
the  city  would  desire  high  rates  of  fare  to  enaible  a  por- 
tion of  the  net  earnings  of  the  street  railways  to  be  paid 
into  the  city  treasury  for  their  relief;  and  the  non-tax- 
payers, or  rather  those  who  only  pay  taxes  indirectly  and 
hardly  realize  that  they  are  taxpayers,  would  demand 
the  lowest  rates  of  fare,  regardless  of  the  needs  of  the 
public  treasury. 

(5)  Who  and  by  what  means  could  any  abuses  involv- 
ing the  rates  of  fare  fixed  by  a  municipality  be  corrected 
or  remedied. 

Every  monoi)oly  has  some  disadvantages,  but  would  not 
a  monopoly  owned  and  operated  by  a  public  corporation 
be  a  great  deal  more  obnoxious  than  a  private  one  subject 
to  the  judicial  control  (for  which  I  contend),  of  its  rates 
of  fare. 

(6)  A  municipality  owning  and  oi)erating  a  street 
railway  system,  would  be  in  possession  of  a  perpetual 
franchise  with  the  power  to  charge  whatever  rates  of  fare 
it  pleased,  and  that  power  would  certainly  be  abused  in 
the  one  direction  or  the  other.  The  rates  would  be  less 
than  they  ought  to  be  or  higher,  and  the  general  public 
would  suffer  either  from  an  inadequate  service,  or  exces- 
sive rates  of  fare. 


231 

(7)  The  restricted  area  or  the  unrestricted  area  of 
territory  to  be  served  by  a  municipal  street  railway  sys- 
tem would  be  detrimental  to  the  public  interests. 

The  Detroit  United  Railway  owns  and  controls  directly 
or  indirectly  eight  suburban  lines.  They  extend  to  Tren- 
ton, Toledo,  Jackson,  Northville,  Pontiac,  Flint,  Port 
Huron  and  Mt.  Clemens.  These  lines  and  the  lines  in  the 
city  of  Detroit  are  operated  as  one  great  systeni,  with  the 
resulting  economies,  and  advantages,  incident  to  such 
relations.  The  present  statute  authorizing  municipal 
ownership  restricts  such  ownership  to  an  area,  not  more 
than  five  miles  from  the  territorial  boundaries  of  the 
municipality,  which  means  that  the  street  railway  system 
of  the  Detroit  United  Railway  would  have  to  be  severed, 
with  the  certainty  that  the  city  in  acquiring  the  urban 
property  must  pay  the  damage  done  to  the  suburban  lines, 
and  that  neither  the  municipal  system  or  the  interurban 
system  can  be  operated  as  economically  or  as  satisfac- 
torily as  when  operated  as  one  system. 

If  the  five-mile  restriction  is  removed  the  municipality 
could  acquire  the  whole  property  and  the  city  of  Detroit 
by  its  common  council  and  Its  public  officials,  would  come 
into  the  control  of  one  of  the  largest  street  railway  sys- 
tems in  the  country.  Bond  issues  to  improve  or  extend 
the  lines  would  have  to  be  authorized  by  the  common 
council,  and  the  management  of  the  property  would  be 
subject  to  all  the  delays,  annoyances  and  controversies 
incident  to  municipal  government  in  the  United  States. 

With  time  contracts  fixing  rates  of  fare  eliminated  from 
the  subject,  municipal  ownership  is  a  wild  and  chaotic 
dream. 

The  postal  service  of  the  United  States  is  frequently 
referred  to  as  a  sample  of  governmental  ownership,  but 


232 

the  greater  part  of  that  service  is  performed  by  privately 
owned  railroads.  The  postal  service  is  good  because  pri- 
vate enterprise  has  enabled  it  to  distribute  the  mails  all 
over  the  country  with  the  greatest  possible  speed. 

It  must  also  be  remembered  that  the  postal  department 
has  an  annual  deficit  of  many  millions  of  dollars. 


233 


XV. 

The  Supreme  Court  of  the  United  States  has 
authoritatively  established  the  doctrine  that  the  rea- 
sonableness of  a  given  rate  of  fare  or  freight  of  a 
public  service  corporation,  is  a  judicial  question,  and 
that  any  legislative  or  executive  action,  anywhere  in 
the  United  States  or  in  any  territory  subject  to  their 
jurisdiction,  purporting  to  conclusively  fix  rates  or 
charges,  without  permitting  a  determination  of  the 
question  by  the  judiciary,  after  a  full  hearing,  is  a 
deprivation  of  property  without  due  process  of  law, 
and  unconstitutional  and  void. 

Cannot  bring  my  arguments  and  observations  to  a  close 
in  any  better  way  than  to  call  the  attention  of  my  read- 
ers to  an  evolution  that  has  already  taken  place  in  the 
law  on  the  relation  of  the  judiciary  to  the  question  of  the 
reasonableness  of  the  rates  of  fare  or  charges  of  public 
service  corporations. 

In  the  famous  case  of  Mnnn  vs.  Illinois,  94  U.  8.  113 
the  Supreme  Court  of  the  United  States  held  that  it  was 
competent  for  the  legislature  of  Illinois  to  fix  the  maxi- 
mum charges  for  the  storage  of  grain  in  warehouses  in 
Chicago  and  other  places  in  the  state,  and  if  the  legisla- 
ture abused  its  power,  the  remedy  must  be  a  resort  to  the 
polls  and  not  to  the  courts.  This  doctrine  was  applied 
and  enforced  in  the  Railroad  cases  decided  at  the  same 
time.    In  one  of  them  the  court  said : 

"As  to  the  claim  that  the  courts  must  d'ecide  what  is 
reasonable^  and  not  the  legislature.  This  is  not  new  to 
this  case.    It  has  been  fully  considered  in  Munn  vs.  People 


234 

of  Illinois.  Where  property  has  been  clothed  with  a  pub- 
lic interest,  the  legislature  may  fix  a  limit  to  that  which 
shall  in  law  be  reasonable  for  its  use.  This  limit  binds 
the  courts  as  well  as  the  people.  If  it  has  been  improp- 
erly fixed,  the  legislature,  not  the  courts,  must  be  appealed 
to  for  the  change." 

That  doctrine  was  completely  overturned  by  the  subse- 
quent decisions  of  the  court.  I  will  only  refer  to  one  of 
them  {Smyth  vs.  Ames,  169  U.  S.  466 )j  in  which  the  court 
in  an  opinion  by  Justice  Harlan  reviewed  the  prior  cases 
and  then  said: 

"In  view  of  the  adjudications  these  principles  must  be 
regarded  as  settled: 

"1.  A  railroad  corporation  is  a  person  within  the 
meaning  of  the  fourteenth  amendment  declaring  that  no 
state  shall  deprive  any  person  of  proi>erty  without  due 
process  of  law,  nor  deny  to  any  person  within  its  jurisdic- 
tion the  equal  protection  of  the  laws. 

"2.  A  state  enactment,  or  regulations  made  under  the 
authority  of  a  state  enactment,  establishing  rates  for  the 
transportation  of  persons  or  property  by  railroad  that 
will  not  admit  of  the  carrier  earning  such  compensation 
as  under  all  the  circumstances  is  just  to  it  and  to  the  pub- 
lic, would  deprive  such  carrier  of  its  property  without  due 
process  of  law  and  deny  to  it  the  equal  protection  of  the 
laws,  and  would  therefore  be  repugnant  to  the  fourteenth 
amendment  of  the  constitution  of  the  United  States. 

"3.  While  rates  for  the  transportation  of  persons  and 
property  within  the  limits  of  a  state  are  primarily  for  its 
determination,  the  question  whether  they  are  so  unreason- 
ably low  as  to  deprive  the  carrier  of  its  property  without 
such  compensation  as  the  constitution  secures,  and  there- 
fore without  due  process  of  law,  cannot  be  so  q^nclusively 
determined  by  the  legislature  of  the  state  or  by  regula- 


235 

tions  adopted  under  its  authority,  that  the  matter  may 
not  become  the  subject  of  judicial  inquiry." 

In  that  case  the  railroad  rates  fixed  by  a  Nebraska 
statute  were  found  to  be  unreasonable  and  confiscatory, 
and  their  enforcement  was  enjoined,  with  leave  on  the 
part  of  the  state,  if  conditions  changed,  to  open  the  de- 
cree. 

The  state  legislature  cannot  impose  unreasonable  rates 
upon  the  Detroit  United  Railway  or  any  other  street  rail- 
way company,  and  it  cannot  be  done  by  the  common 
council  of  the  city  of  Detroit  under  any  authority  that 
has  been  or  can  be  conferred  upon  it  by  the  l^islature. 

At  the  common  law  the  question  whether  the  rates  or 
charges  of  a  common  carrier  were  reasonable  was  neces- 
sarily a  judicial  question  to  be  determined  by  appropriate 
litigation  between  the  carrier  and  its  patrons. 

Legislative  interference  in  the  United  States  has  never 
been  anything  more  than  advisory.  The  state  l^islatures 
as  to  intrastate  carriers,  and  the  congress  as  to  interstate 
carriers,  can  by  duly  enacted  statutes,  declare  what  in 
their  judgment  are  reasonable  rates;  but  as  we  have  seen, 
their  action  is  not  conclusive,  and  it  may  be  reviewed  by 
the  courts.  The  legislative  declaration,  usually  made 
without  investigation,  is  merely  preliminary  to  a  full  and 
complete  investigation  by  a  court  of  competent  jurisdic- 
tion. 

That  fixing  rates  of  fare  is  not  an  exercise  of  the  legis- 
lative power  is  shown  by  the  rulings  of  a  number  of  state 
Supreme  Courts,  that  the  power  to  fix  reasonable  rates 
may  be  vested  in  executive  boards  or  commissions.  It  is  a 
fundamental  principle  of  American  constitutional  law 
that  legislative  power  cannot  be  delegated;  it  cannot  be 
exercised  except  with  the  consent  and  approval  of  a  legis- 


236 

lative  body  directly  and  immediately  elected  by  the  peo- 
ple; and  the  representatives  so  chosen,  cannot  delegate 
their  authority,  which  limitation  arises  from  the  nature 
of  the  i)ower,  and  the  division  of  the  government  into 
three  co-ordinate  branches. 

In  the  Minnesota  railroad  cases,  134  TJ.  S.  418,  467,  a 
state  statute  allowing  a  railroad  commission  to  establish 
rates,  which  were  to  be  conclusive  and  final,  was  declared 
a  violation  of  the  constitution  of  the  United  States. 

Among  other  things  the  court  said: 

'The  question  of  the  reasonableness  of  a  rate  of  charge 
for  transportation  by  a  railroad  company,  involving  as  it 
does  the  element  of  reasonableness  both  as  regards  the 
company  and  as  regards  the  public,  is  eminently  a  ques- 
tion for  judicial  investigation,  requiring  due  process  of 
law  for  its  determination.  If  the  company  is  deprived  of 
the  power  of  charging  reasonable  rates  for  the  use  of  its 
property,  and  such  deprivation  takes  place  in  the  absence 
of  an  investigation  by  judicial  machinery,  it  is  deprived 
of  the  lawful  use  of  its  property,  and  thus,  in  substance 
and  effect,  of  the  property  itself,  without  due  process  of 
law  and  in  violation  of  the  constitution  of  the  United 
States;  and  in  so  far  as  it  is  thus  deprived,  while  other 
persons  are  permitted  to  receive  reasonable  profits  upon 
their  invested  capital,  the  company  is  deprived  of  the  rea- 
sonable protection  of  the  laws." 

With  this  high  authority  in  support  of  the  arguments 
set  forth  in  the  forgoing  pages,  I  respectfully  submit 
that  the  question  now  pending  between  the  common  coun- 
cil of  the  city  of  Detroit  and  the  Detroit  United  Railway, 
concerning  rates  of  fare,  can  only  be  authoritatively  de- 
termined by  a  court  of  equity,  and  that  it  ought  to  be  so 
determined,  and  no  new  contract  fixing  the  rates  of  fare, 


237 

should  be  discussed,  considered,  or  entered  into,  on  any 
pretext  whatever. 

"But  truth  shall  conquer  at  the  lajst; 
For  round  and  round  we  run, 
I  And  ever  the  right  comes  uppermost, 

And  ever  is  justice  done." 


239 


APPENDIXES. 

No.  1. 

Indiana  Statute  Fixing  Rates  of  Faee  and  Conserv- 
ing Street  Railways  as  Permanent  Public  Improve- 
ments AND  Perpetual  Investments. 

"An  Act  concerning  street  railroad  companies  in 
cities,  the  population  of  which  exceeds  one  hundred  thou- 
sand, repealing  all  laws  in  conflict  with  this  act,  and  de- 
claring an  emergency. 

(March  8,  1899.) 

Section  1.  Be  it  enacted  by  the  General  Assemblj'  of 
the  State  of  Indiana,  that  it  shall  and  may  be  lawful  for 
any  street  railroad  company  now  or  hereafter  organized 
under  the  laws  of  the  State  of  Indiana  for  the  purpose 
of  operating  a  street  railroad  in  any  city  the  population 
of  which  by  the  federal  census  immediately  preceding  the 
incorporation  of  such  railroad  company  exceeds  one 
hundred  thousand  persons,  and  for  such  city  to  enter 
into  a  contract  defining  the  terms  upon  which  such  rail- 
road company  shall  exercise  its  franchise  within  such 
city,  subject  to  all  the  provisions  of  this  act. 

Sec.  2.  In  any  such  contract  shall  be  specified  the 
term,  not  exceeding  thirty-four  years  from  the  taking 
effect  of  the  contract,  during  which  the  franchise  of  such 
corporation  shall  continue ;  the  rate  of  fare  to  be  charged, 
whicli  shall  be  for  a  single  cash  fare  not  more  than  five 
cents  for  each  passenger  over  the  age  of  five  years,  witli 
provisions  in  the  contract  securing  the  right  of  transfer 


240 

for  such  cash  fare  to  and  over  any  other  line  of  said 
company,  and  that  six  tickets,  entitling  the  holder  to 
passage  and  such  transfer,  shall  be  sold  for  not  to  exceed 
twenty-five  cents,  and  that  twenty-five  of  such  tickets 
with  like  transfers,  shall  be  sold  for  not  to  exceed  one 
dollar,  and  said  contract  shall  provide  that  such  tickets 
shall  Tdc  kept  for  sale  on  all  cars  when  the  same  are 
carrying  passengers,  and  all  such  tickets  shall  be  received 
as  fare  from  any  passenger  presenting  the  same.  The 
ordinance  granting  such  franchise  and  approving  such 
contract  shall  specify  the  method  or  methods  of  propul- 
sion that  shall  or  may  be  used  under  such  contract,  pro- 
viding that  such  ordinance  and  contract  shall  reserve 
to  such  city  the  right  to  require  that  such  methods  of 
propulsion  shall  at  any  time  be  introduced  as  w^ill  insure 
first-class  and  efficient  service;  and  shall  state  the  con- 
sideration to  be  received  by  said  city.  Said  ordinance 
shall  provide  further,  that  the  company  making  such  con- 
tract shall  be  required  to  pave  the  space  occupied  by  and 
betrv^een  its  tracks,  and  for  a  space  of  eighteen  inches  on 
the  outside  thereof  by  the  board  of  public  works,  and  to 
keep  the  same  in  repair;  said  paving  and  repairing  to  be 
done  under  specifications,  both  as  to  material  and  manner, 
as  provided  by  the  board  of  public  works,  and  under  the 
supervision  of  the  city  engineer,  and  shall  further  provide 
that,  at  all  times  during  the  period  of  such  franchise, 
said  city  may  require  such  seasonable  extensions  of  the 
lines  of  said  company  or  the  construction  of  such  new 
lines  as  may  be  necessary  for  the  efficient  operation  of 
such  railway  and  for  the  convenience  of  the  public,  and 
shall  provide  further  that  said  company  shall  not  extend 
any  of  its  lines  or  enter  upon  any  new  streets  in  said  city 
without  the  consent  of  the  common  council  of  said  city 
first  had  and  obtained,  and  in  making  such  contract 
said  city  shall  reserve  to  itself  the  right  to  at  all  times 


241 

exercise  such  reasonable  control  over  such  company  and 
the  operation,  maintenance  and  construction  of  its  lines 
as  will  secure  efficient  and  first-class  service.  And  such 
ordinance  and  contract  may  contain  such  other  terms, 
conditions  or  requirements,  not  inconsistent  with  the  pro- 
visions of  this  act,  as  may  be  agreed  upon  between  the 
parties,  or  may  be  necessary  to  make  effectual  all  the  terms 
of  the  contract.  As  a  part  of  any  contract  entered  into 
pursuant  to  the  provisions  of  this  act,  and  as  a  part  of  the 
consideration  therefor  the  company  entering  into  said  con- 
tract shall  first  make  an  absolute  surrender  to  such  city  of 
all  franchises  and  rights  to  the  use  and  occupancy  of  the 
streets,  alleys  and  public  places  of  such  city  owned,  held, 
or  claimed  by  such  company  within  the  corporate  limits 
of  such  city  at  the  time  of  the  making  of  such  contract 
pursuant  to  the  provisions  of  this  act,  or  theretofore 
owned,  held  or  claimed  by  such  company.  Any  city  en- 
tering into  any  contract  with  any  company  under  the 
provisions  of  this  act  for  the  use  and  occupancy  of  the 
streets,  alleys  and  public  places  in  such  city  for  street 
railroad  purposes  may  at  any  time  within  two  years 
and  not  later  than  one  year  before  the  expiration  of  said 
contract,  purchase  of  such  company  its  property  of  every 
description  whatsoever,  and  if  any  such  city  and  com- 
pany shall  be  unable  to  agree  upon  the  terms  of  such  pur- 
chase, then  such  city  may  file  its  complaint  or  petition 
in  the  circuit  court  of  the  county  in  which  such  city  is 
situated  for  a  determination  of  the  value  of  such  prop- 
erty in  the  manner  prescribed  in  section  8  of  this  act, 
and  when  the  value  of  such  property  is  so  ascertained, 
such  city  may,  upon  the  expiration  of  such  contract 
after  tendering  the  amount  of  the  value  of  such  property 
as  determined  by  said  court  at  once  take  possession  of 
such  property  and  operate  such  street  railroad  for  its 
own  use  and  purposes,  and  such  city  is  hereby  authorized 


242 

to  issue  bonds  for  the  payment  in  whole  or  in  part  of 
such  sum  fixed  as  the  value  of  such  property.  Should 
said  company  habitually,  continually  or  continuously 
violate  any  of  the  provisions  of  this  act,  or  fail  to  com- 
ply with  the  ordinance  approving  said  contract  or  such 
other  ordinances  as  are  passed  by  the  common  council 
under  the  provisions  of  this  act,  then  said  company  shall 
forfeit  all  its  rights,  title  and  interest  in  or  to  the  use 
and  occupancy  of  the  streets,  alleys  and  highways  of 
said  city  for  street  railroad  purposes,  its  contract  and 
franchise  for  the  same  shall  be  at  an  end,  and  the  prose- 
cuting attorney  of  the  county  in  which  such  city  is  lo- 
cated shall,  upon  the  writen  complaint  of  five  hundred 
resident  freeholders  of  said  city  stating  wherein  said 
company  shall  have  violated  the  terms  of  such  contract 
or  ordinances  or  provisions  of  this  act,  bring  an  action 
in  the  circuit  or  superior  court  of  the  county  in  which 
such  city  shall  be  situated  on  relation  of  the  State  of  In- 
diana, to  forfeit  the  said  contract  and  franchise  and  de- 
clare the  same  at  an  end,  and  such  action  shall  be  tried 
as  other  actions  are  tried,  and  upon  a  finding  and  judg- 
ment that  such  company  has  violated  its  said  contract 
or  said  ordinances  or  provisions  of  this  act,  as  herein- 
before provided,  then  said  court  shall  enter  a  judgment 
and  decree  declaring  said  contract  and  franchise  for- 
feited and  at  an  end,  and  said  city  shall,  through  its 
board  of  public  works,  proceed  to  relet  the  use  and  occu- 
pancy of  its  streets,  alleys  and  public  places  for  street 
railroad  purposes  in  the  manner  and  upon  the  terms  and 
conditions  provided  in  section  8  of  this  act,  and  if  said 
action  shall  be  determined  in  favor  of  such  company, 
then  the  petitioners  shall  be  liable  for  the  costs  of  said 
action.  Any  such  company  so  contracting  with  said  city 
shall  permit  the  use  of  its  track  or  tracks  by  any  incor- 


243 

porated  suburban  or  interurban  railroad  company  from 
the  corporate  limits  or  from  the  nearest  connecting  point 
within  the  corporate  limits  of  such  city  to  some  central 
point  in  such  city,  for  the  purpase  of  discharging  and  re- 
ceiving passengers,  with  the  right  of  such  company  to 
run  its  cars  thereon  to  some  loop  and  return  thereon 
out  of  said  city  whenever  such  use  has  been  permitted 
by  the  board  of  public  works  and  common  council  of  said 
city  by  contract  approved  by  ordinance.  That  the  board 
of  public  works  shall  require  in  any  such  franchise 
granted  hereunder,  such  consent  to  be  given  in  such  fran- 
chise with  the  right  on  the  part  of  the  board  of  public 
works  and  common  council  to  establish  such  central 
point  and  designate  the  track  or  tracks  to  be  used  in 
going  to  and  from  the  sahie  in  such  city.  That  such  use 
shall  be  upon  such  conditions  and  under  such  regulations 
as  the  board  of  public  works  and  the  common  council  of 
such  city  shall  prescribe,  and  upon  such  terms  as  to  con- 
pensation  a»s  may  be  agreed'  upon  by  such  companies; 
and  in  case  such  companies  cannot  agree  as  to  such  com- 
pensation within  thirty  days  after  application  made  for 
the  same,  then  such  use  shall  be  permitted  upon  such 
terms  as  to  compensation  as  may  be  fixed  and  determined 
in  an  action  instituted  by  either  of  such  companies  in 
the  circuit  court  of  the  county  in  which  such  city  may 
be  situated;  and  pending  such  controversy  or  suit,  such 
suburban  or  interurban  company  shall  have  the  right  to 
use  the  track  or  tracks  designated  by  the  board  of  public 
works  or  common  council,  upon  executing  a  bond  in  such 
amount  and  with  such  security  as  shall  be  approved  by 
said  court,  conditioned  for  the  payment  to  such  company 
owning  and  operating  such  railway  in  such  city  the  com- 
pensation which  may  accrue  up  to  the  time  of  the  final 
decision  in  said  action,  shall  be  fixed  hy  the  court :    And, 


2U 

provided,  that  in  case  the  company  owning  and  operat- 
ing such  railway  in  such  city  cannot  furnish  power  to 
propel  the  cars  of  such  suburban  or  interurban  company, 
then,  in  that  event,  such  sulburban  or  interurban  company 
shall  have  the  right  to  construct  and  maintain  a  feed 
and  trolley  wire  on  the  poles  or  in  the  conduits  of  such 
company  to  such  terminal  points  as  may  be  designated 
by  the  board  of  public  works  and  common  council  of 
such  city,  and  compensation  for  the  use  of  poles  and  con- 
duits for  the  construction  and  maintenance  of  such 
wires  is  to  be  fixed  as  above  provided  for  the  use  of  the 
tracks;  and  in  such  case  such  suburban  or  interurban 
company  shall  have  a  right  to  establish  and  maintain 
power  houses  and  place  its  wires  on  such  poles  or  in  such 
conduits.  Provided,  however,  that  the  provisions  of  this 
section  shall  not  apply  to  any  suburban  or  interurban 
railway  company  whose  line,  including  the  track  or 
tracks  so  designated  within  said  city,  does  not  extend  to  a 
distance  of  six  or  more  miles  for  such  central  point. 

Sec.  3.  All  the  terms  and  covenants  of  any  contract 
so  made,  as  aforesaid,  shall  be  binding  and  conclusive 
for  the  period  fixed  therein,  and  no  longer,  and  the 
mutual  rights,  powders,  obligations  and  liabilities  of  the 
parties  thereto,  shall  be  as  therein  expressed,  subject, 
however,  to  all  the  provisions  of  this  act. 

Sec.  4.  It  shall  be  lawful  for  any  such  railroad  com- 
pany contracting  as  aforesaid  with  such  city,  to  acquire 
by  purchase,  lease  or  otherwise,  the  property  and  fran- 
chises, or  any  portion  of  the  same,  of  any  other  street 
railroad  company  or  companies  now  or  hereafter  incor- 
porated under  the  laws  of  the  State  of  Indiana,  owning 
or  operating  or  possessing  a  franchise,  to  own  and  oper- 
ate  a   street  railroad   within   such    city,   or   connecting 


245 

therewith  in  territory  adjacent  thereto,  for  money,  shares 
of  stock,  or  bonds  or  other  obligations;  and  to  issue  in 
payment  for  the  property  and  franchises  so  purchased  or 
otherwise  acquired,  its  bonds,  obligations  or  shares  of 
stock  to  such  amount,  in  such  manner,  and  upon  such 
terms,  as  its  board  of  directors  may  think  proper  and 
contract;  and  it  shall  also  be  lawful  for  such  company, 
in  addition  to  the  powers  possessed  under  the  general 
laws  for  the  incorporation  of  street  railroad  companies 
and  the  amendments  thereto  to  secure  payment  of  all 
bonds  or  obligations  so  issued  by  it,  by  mortgage  upon  its 
corporate  franchises,  rights,  privileges,  property,  real  and 
personal,  and  mixed  as  well  as  upon  the  franchises,  rights, 
privileges,  property,  real,  personal  and  mixed,  purchavsed 
by  it  as  aforesaid :  Provided,  that  no  bonds  shall  be  issued 
by  said  company  for  a  period  extending  beyond  the  time  of 
the  expiration  of  the  contract  executed  under  the  pro- 
visions of  this  act. 

Sec.  5.  Any  street  railroad  company  now  or  hereafter 
incorporated  under  the  State  of  Indiana  owning  or  oper- 
ating or  possessing  a  franchise  to  own  and  operate  a 
street  railroad  in  such  city  or  connecting  therewith  in 
territory  adjacent  thereto,  may  sell,  lease  or  otherwise 
transfer  its  property,  franchises  and  assets  of  every  de- 
scription and  wheresoever  situated  or  any  portion  of  the 
same  to  any  other  company  authorized  to  acquire  the 
same  by  purchase,  lease  or  otherwise,  under  section  4 
hereof,  for  money,  stock  or  bonds  or  other  obligations: 
Provided,  however,  that  such  sale,  lease  or  transfer  shall 
be  authorized  by  the  vote  of  a  majority  in  value  of  all 
the  shares  of  said  company,  given  at  a  meeting  of  the 
shareholders  called  for  the  purpose;  at  such  meeting  a 
resolution  specifying  the  consideration,  terms  and  con- 
ditions of  such  sale  or  transfer  shall  be  submitted  to 


246 

the  shareholders  for  their  approval  or  disapproval;  and 
upon  the  vote  of  a  majority  in  value  of  said  shareholders 
the  board  of  directors  of  the  said  company  shall  cause 
the  contract  authorized  by  such  resolution  to  be  duly 
executed  and  delivered  to  such  purchaser,  lessee  or  trans- 
feree hj  the  proper  officers  of  the  company;  such  meet- 
ing of  said  company  shall  be  called  in  pursuance  of  a 
resolution  of  its  board  of  directors  instructing  the  proper 
officers  of  the  company  to  call  the  same,  and  after  twenty 
days'  notice,  which  shall  be  given  by  writen  or  printed 
notice,  mailed  to  every  stockholder  at  his  last  known 
postoffice  address. 

Sec.  6.  If  a  sale  be  made,  approved  by  a  vote  of  the 
majority  in  value  of  all  the  shares  of  the  company  as 
aforesaid,  any  shareholder  or  shareholders  of  such  com- 
pany not  voting  in  favor  of  such  sale,  and  who  may  be 
dissatisfied  with  the  terms  thereof,  may  apply  by  petition 
to  the  circuit  court  of  the  county  in  which  such  railroad 
is  located,  within  thirty  days  after  such  shareholders' 
meeting,  praying  said  court  to  appoint  three  disinterested 
persons  to  estimate  and  appraise  the  value  of  the  prop- 
erty so  sold,  over  and  above  any  liens  or  incumbrances 
thereon  and  claims  or  indebtedness  for  the  payment  of 
which  the  same  may  be  liable,  and  having  so  appraised 
said  property  and  franchises,  to  estimate  and  ascertain 
the  value  thereof,  and  the  value  of  said  shares  having 
been  so  appraised  by  the  said  commissioners  by  the  vote 
of  a  mapority  thereof,  shall  be  reported  to  said  court, 
and  when  confirmed  by  the  said  court  shall  be  final  and 
conclusive  on  all  parties.  The  value  of  the  shares  thus 
ascertained  shall  be  paid  to  the  said  petitioning  share- 
holder by  the  street  railroad  company  purchasing  the 
property  and  franchises  and  other  assets  sold  as  aforesaid 
upon  surrender  to  the  purchasing  company  of  the  shares 


247 

so  appraised.  In  case  said  petitioning  shareholder  shall 
not  present  their  shares  to  the  purchasing  company  for 
surrender  within  sixty  days  from  the  date  of  said  award, 
or  in  case  of  minority  or  other  legal  disability  said  pur- 
chasing company  shall  make  payment  of  the  amount  of 
said  award  to  the  clerk  of  the  court,  and  upon  such  pay- 
ment to  the  clerk  of  the  court,  the  property  or  franchises 
purchased  shall  be  released  from  the  lien  of  said  award. 
The  cost  of  such  proceeding  shall  be  paid  by  the  purchas- 
ing company. 

Sec.  7.  All  rights  of  creditors  and  liabilities  for  dam- 
ages and  all  liens  or  incumbrances  upon  the  property  or 
franchise  sold  or  transferred,  pursuant  hereto,  shall  con- 
tinue unimpaired,  and  may  be  enforced  as  against  such 
property  and  franchises  as  if  said  sale  or  transfer  had 
not  been  made. 

Sec.  8.  No  street  railroad  company  shall  hereafter 
have  the  right  to  use  or  occupy  for  street  railroad  pur- 
poses the  streets,  alleys,  highways  or  other  public  places 
of  any  such  city  except  under  and  in  pursuance  of  an  or- 
dinance or  contract  specifically  stating  the  period  of  such 
use  or  occupancy.  Where  such  use  or  occupancy  is  now  or 
shall  hereafter  be  had  by  any  street  railroad  company 
under  any  ordinance,  or  ordinances,  contracts  or  agree- 
ments in  which  is  fixed  or  limited,  or  attempted  to  be 
fixed  or  limited,  the  period  of  time  of  such  occupancy, 
or  in  which  an  extension  of  time  originally  so  fixed  or 
limited,  has  been  made,  and  the  right  and  franchises  of 
such  use  or  occupancy  shall  not  in  nine  or  more  months 
prior  to  the  final  expiration  of  the  period  of  time  so  lim- 
ited or  extended,  have  been  granted  for  a  further  definite 
period  of  time  to  said  company,  or  some  company  which 
has  acquired  the  property  and  franchise  of  said  company 


248 

by  a  contract  entered  into  by  such  city,  and  said  com- 
pany under  the  provisions  of  this  act,  and  in  all  such 
cases,  upon  the  final  expiration  of  the  time  so  originally 
limited  or  extended,  the  right  to  such  use,  or  occupancy 
by  said  company,  its  successors  and  assigns,  or  any  other 
company  claiming  under  such  ordinance,  contracts  or 
agreements,  shall  immediately  terminate  and  cease  for- 
ever. Thereupon,  such  company,  its  successors  or  as- 
signs, may  remove  its  tracks  and  appurtenances  from 
such  streets,  alleys  and  other  public  places,  doing  no 
more  damage  thereto  than  is  necessary,  and  when  the 
same  are  removed  such  company,  its  successors  or  assigns, 
shall  restore  such  streets,  alleys  and  public  places  as 
nearly  as  may  be,  to  the  condition  in  which  the  same 
were  prior  to  such  removal ;  which  removal  shall  be  made 
within  a  time  to  be  fixed  by  the  mayor  of  such  city,  and 
the  work  shall  be  done  under  the  supervision  of  the 
street  commissioner  or  other  officer  having  the  charge 
and  supervision  of  the  streets  therein,  and  upon  failure 
so  to  remove  the  same,  and  to  elect  to  have  the  same  ap- 
propriated by  its  successor  in  such  use  and  occupancy 
as  hereinafter  provided,  the  city  may  cause  the  same  to 
be  removed  at  the  expense  of  the  owner:  Provided,  how- 
ever, that  not  later  than  nine  months  before  the  expira- 
tion of  the  period  of  time  so  originally  limited  or  ex- 
tended, in  the  event  that  no  contract  for  the  further  use 
and  occupancy  of  such  streets,  alleys  and  public  places 
has  been  entered  into  under  the  provisions  of  this  act 
between  such  city  and  the  said  company,  its  successors 
or  assigns,  such  city,  through  its  board  of  public  works, 
shall  open  to  free  competition  the  further  occupancy  for 
a  period  not  exceeding  thirty  years  of  the  streets,  alleys 
and  public  places  of  such  city,  for  the  purpose  of  operat- 
ing therein  an  electric  or  other  street  railroad,  and  such 
city,  through  its  board  of  public  works,  shall  prescribe 


249 

in  the  form  of  a  contract  to  be  entered  into  by  the  suc- 
cessful bidder,  all  conditions  and  limitations  for  such  use 
of  said  streets,  alleys  and  public  places  as  prescribed  in 
section  2  of  this  act;  and  such  other  conditions  as  shall 
best  promote  the  interests  of  said  city  and  the  public, 
and  also  a  bond  or  undertaking  with  sureties  to  be  ap- 
proved by  said  board  of  public  works,  conditioned  that 
the  bidder,  if  successful,  will  enter  into  the  prescribed 
contract  in  accordance  with  the  terms  and  conditions 
thereof  and  of  the  bid,  and  in  case  of  failing  or  refusing 
or  forfeiting  as  hereinafter  provided,  the  right  to  enter 
into  such  contract,  to  pay  to  such  city  all  damages  it  may 
sustain  by  reason  of  such  failure,  refusal  or  forfeiture, 
and,  as  to  bidders  other  than  the  occupying  company, 
that  the  bidder,  if  successful,  and  in  case  the  occupying 
company  elect  not  to  remove  its  tracks  and  other  prop- 
erty from  the  streets,  will  immediately  institute  as  here- 
inafter provided,  proceedings  to  appropriate  the  property 
of  said  company  and  pay  the  assessed  value  of  such 
property  to  said  company  or  other  person  entitled  there- 
to as  hereinafter  provided.  In  such  competition  no  com- 
pany now  or  hereafter  organized  for  such  purpose  shall 
be  excluded.  If  the  occupying  company  shall  not  be  the 
successful  competitor,  and  elects  not  to  remove  its  tracks 
or  other  property  from  the  streets,  then  the  company 
that  shall  be  successful  in  the  competition  shall  imme- 
diately after  the  acceptance  of  its  bid  by  such  city 
through  its  board  of  public  works,  file  in  the  circuit  court 
of  the  county  where  such  city  is  located,  a  complaint  or 
petition  for  an  appropriation  of  the  property  of  the  oc- 
cupying company  and  an  assessment  of  its  damages  by 
reason  of  such  appropriation,  describing  the  plant,  prop- 
erty, power  houses,  cars,  electric  lines  and  poles,  and  all 
other  appurtenances  and  appliances  connected  with  and 


250 

used  as  a  part  of  the  id.il way  system  of  the  occupying 
company  to  be  appropriated,  and  showing  the  execution 
of  the  bond  or  undertaking  aforesaid,  to  which  proceed- 
ings all  persons  having  an  interest  in  or  lien  upon  such 
property  shall  be  made  parties.  The  practice  and  pro- 
ceedings upon  such  appropriation,  and  in  ascertaining 
the  value  of  such  plant  and  property,  shall  be  as  is  now 
provided  for  the  appropriation  of  property  for  railway 
purposes  under  the  general  laws  of  this  state.  When  the 
value  of  this  property  is  so  ascertained  upon  the  expira- 
tion of  the  contract  of  the  occupying  company,  or  if  such 
contract  has  expired  before  the  ascertainment  of  such 
value,  then,  within  a  time  to  be  fixed  by  such  court,  such 
appropriating  company  shall  pay  such  value  to  the  clerk 
of  the  court  for  the  use  of  the  occupying  company,  or 
other  person  entitled  thereto  as  determined  by  the  court; 
and  upon  such  payment,  the  appropriating  company  shall 
be  seized  and  become  the  owner,  free  and  unincumbered, 
of  all  the  title  to  and  of  the  property  so  appropriated, 
and  shall  take  possession  of  and  operate  such  railroad 
system  from  and  after  the  expiration  of  the  contract  of 
the  occupying  company;  and  upon  failure  to  institute 
such  proceedings,  or  to  enter  into  or  perform  the  con- 
tract in  accordance  with  the  bid,  all  right  of  the  success- 
ful bidder  to  enter  into  the  contract,  or  to  the  use  and 
occupancy  of  the  streets,  shall  be  forfeited,  and  such  city, 
through  its  board  of  public  works,  shall  proceed  to  relet 
the  use  and  occupancy  of  the  streets,  alleys  and  public 
places  for  street  railroad  purposes  in  the  manner  and 
upon  the  terms  and  conditions  heretofore  provided  in 
this  section,  and  several  actions  may  be  maintained  upon 
such  bond  or  undertaking  by  such  city,  occupying  com- 
pany or  other  company  or  person  interested,  for  such 
failure  to  perform  its  conditions.     In  case  the  railroad 


251 

company  owning  the  property  to  be  appropriated  has 
theretofore  acquired  rights  to  lay  and  maintain  tracks 
outside,  of  the  corporate  limits  of  such  city  secured  from 
the  board  of  commissioners  of  the  county,  which  tracks 
at  the  time  of  such  appraisement,  by  reason  of  the  ex- 
tension of  the  corporate  limits,  are  within  such  city,  the 
same,  at  the  election  of  the  owner,  may  be  embraced  in 
such  proceedings  and  appraisement. 

Sec.  9.  Nothing  contained  in  this  act  shall  be  so  con- 
strued as  to  take  away  from  the  board  of  public  works 
and  common  council  of  any  such  city,  the  exclusive 
powers  now  exercised  over  the  streets,  highways,  alleys 
and  bridges  within  such  city,  or  the  rights  and  powers 
now  possessed  by  such  board  of  public  works  and  com- 
mon council  to  enter  into  contract  with  reference  to  the 
use  of  the  streets,  alleys  and  public  places  in  such  city 
for  streets  railroad  puri)oses,  except  insofar  as  such 
powers  and  rights  shall  be  affected  by  contracts  entered 
into  pursuant  to  the  provisions  of  this  act,  and  except  as 
such  powers  are  reserved  to  such  city  by  the  provisions 
of  this  act. 

Sec.  10.  It  shall  be  unlawful  for  any  railroad  com- 
pany operating  under  a  contract  secured  under  the  pro- 
visions of  this  act  or  an  employe  of  the  same  to  charge 
or  receive  any  greater  amount  for  fares  than  that  pro- 
vided for  in  this  act,  and  it  shall  be  unlawful  to  fail  or 
refuse  to  keep  on  sale  tickets  as  provided  in  this  act,  and 
anyone  violating  any  of  the  provisions  of  this  section 
shall  be  fined  in  any  sum  not  to  exceed  one  hundred  dol- 
lars. 

Sec.  11.  All  laws  and  parts  of  laws  inconsistent  with 
the  provisions  of  this  act  are  hereby  repealed. 


252 

Sec.  12.  It  is  declared  that  an  emergency  exists  for 
the  immediate  taking  effect  of  this  act,  and  the  same 
shall  therefore  be  in  full  force  from  and  after  its  pas- 
sage. 


253 

No.  2. 

An  Ordinance. 

Authorizing  the  Chicago  City  Railway  Company  to  Con- 
struct, Maintain  and  Operate  a  System  of  Street  Rail- 
ways in  Streets  and  Public  Ways  of  the  City  of  Chi- 
cago. 

(February  11,  1907.) 

PREAMBLE. 

Whereas,  the  Chicago  City  Railway  Company,  herein- 
after called  the  Company,  now  maintains  and  operates 
a  system  of  street  railways  in  the  streets  and  public 
ways  in  the  south  division  of  the  City  of  Chicago;  and 

Whereas,  the  said  city  desires,  for  the  proper  accom- 
modation of  the  public,  to  provide  for  the  reconstruction, 
re-equipment  and  extension  of  the  said  street  railway 
system  now  maintained  and  operated  by  the  Company 
and  for  the  unified  operation  of  said  street  railway  sys- 
tem together  with  the  street  railway  system  now  main- 
tained and  operated  by  the  receivers  of  the  Chicago  Union 
Traction  Company,  and  to  be  in  a  position  as  soon  as 
practicable  freely  to  deal  with  the  subject  of  transpor- 
tation in  its  streets  as  a  whole,  and  to  fix  and  determine 
the  definite  terms  and  conditions  upon  which  the  said 
city  shall  have  the  right  to  purchase  and  take  over  at 
any  time  the  street  railway  system  of  the  Company;  now, 
therefore, 

Be  it  ordained  by  the  City  Council  of  the  City  of  Chicago : 

AUTHORITY. 

Section  1.  That  in  consideration  of  the  acceptance 
by  the  Company  of  this  ordinance,  subject  to  all  of  the 


254 

provisions,  conditions,  requirements  and  limitations  here- 
of, consent,  permission  and  authority  are  hereby  granted 
to  the  Company,  its  lessees,  successors  and  assigns,  to 
construct,  reconstruct,  maintain  and  operate  a  system 
of  street  railways  in,  upon  and  along  the  streets  and  pub- 
lic ways  or  portions  thereof,  in  the  City  of  Chicago,  set 
out  in  the  schedule  marked  "Exhibit  A"  hereto  attached 
and  made  a  part  hereof. 

The  said  consent,  permission  and  authority  hereby 
granted  to  said  Company,  its  lessees,  successors  and  as- 
signs, to  construct,  reconstruct,  maintain  and  operate  the 
said  street  railway's  in,  upon  and  along  22d  street  from 
the  east  bank  of  the  Chicago  river  to  Wabash  avenue, 
are  granted  subject  to  all  of  the  rights,  franchises  and 
privileges  of  the  Chicago  General  Kailway  Company  upon 
said  22d  street  between  the  points  mentioned,  under  and 
by  virtue  of  a  lease  of  said  tracks  from  the  Chicago  City 
Kailway  Company  to  the  Chicago  General  Kailway  Com- 
pany dated  July  5,  1897;  but  shall  wholly  cease  and  de- 
termine on  the  8th  day  of  February,  A,  D.,  1912,  and 
are  subject  at  all  times  to  all  the  provisions,  conditions 
and  limitations  of  this  ordinance,  including  the  rigbt  of 
the  city  or  its  licensee  to  purchase  and  acquire  said 
tracks  and  all  of  the  rights  hereby  granted,  at  the  times 
and  upon  the  terms  hereinafter  provided. 

The  said  consent,  permission  and  authority  hereby 
granted  to  said  Company,  its  lessees,  successors  and  as- 
signs, to  construct,  reconstruct,  maintain  and  operate 
the  said  street  railways  in,  upon  and  along  Main  street, 
from  Archer  avenue  to  31st  street,  and  Laurel  street 
from  31st  street  to  39th  street,  are  granted  subject  to  all 
of  the  rights,  franchises  and  privileges  of  the  Chicago 
General  Railway  Company  upon  said  Main  and  Laurel 


255 

streets  between  the  points  mentioned,  under  and  by  vir- 
tue of  a  lease  of  said  tracks  from  the  Chicago  City  Rail- 
way Company  to  the  Chicago  General  Railway  Company, 
dated  October  1,  1897,  bnt  shall  wholly  cease  and  deter- 
mine on  the  4th  day  of  February,  A.  D.,  1915,  and  are 
subject  at  all  times  to  all  the  provisions,  conditions  and 
limitations  of  this  ordinance,  including  the  right  of  the 
city  or  its  licensee  to  purchase  and  acquire  said  tracks 
and  all  of  the  rights  hereby  granted,  at  the  times  and 
upon  the  terms  hereinafter  provided. 

For  the  purpose  of  carrying  into  effect  the  desire  of 
the  said  city  to  provide  for  the  unified  operation  of  said 
street  railways,  an  ordinance  similar  to  this  ordinance 
in  general  provisions  and  character,  running  to  the  Chi- 
cago Railways  Company,  as  grantee,  covering  the  system 
of  street  railways  now  maintained  and  operated  by  the 
receivers  of  the  Chicago  Union  Traction  Company  in  the 
north,  west,  and  a  portion  of  the  south  divisions  of  said 
city,  has  been  presented  for  passage  concurrently  with 
this  ordinance,  and  it  is  hereby  expressly  provided  that, 
upon  the  passage  and  acceptance  of  said  last  mentioned 
ordinance,  then  in  all  cases  where  tliis  ordinance  and  the 
said  ordinance  relating  to  the  street  railways  now  main- 
tained and  operated  by  the  receivers  of  the  Chicago 
Union  Traction  Company  confer  grants  ux)on  more  than 
one  company  in  the  same  part  of  any  street,  the  rights 
granted  to  the  respective  companies  in  such  part  of  any 
street  shall  be  construed  to  be  for  a  mutual  and  joint 
use  of  tracks,  and  the  rights  of  each  company  therein 
shall  be  the  same  as  though  the  said  ordinances  making 
such  grants  had  been  passed  and  had  taken  effect  con- 
currently, without  regard  to  the  actual  dates  of  their 
respective  passage  and  acceptance.  Whenever  such  tracks 
are  to  be  used  jointly,  they  shall  be  constructed,  main- 


256 

tained  and  operated  at  the  equal  joint  expense  of  the 
said  companies. 

EECONSTRUCTION. 

Sec.  2.  The  Company  shall  proceed  at  once  to  recon- 
struct portions  of  its  track  and  roadbed  and  put  its  en- 
tire street  railway  system,  plant  and  equipment  in  first- 
class  condition,  in  full  compliance  with  the  specifications 
and  provisions  for  such  work  in  this  ordinance  and  in  the 
exhibit  hereto  attached,  marked  "Exhibit  B"  and  made  a 
part  of  this  ordinance,  with  the  same  force  and  effect  as 
though  herein  fully  set  forth,  and  to  operate  and  main- 
tain said  system  in  accordance  with  the  provisions  of  this 
ordinance  and  of  said  "Exhibit  B." 

Such  provisions  of  this  ordinance  as  are  in  the  nature 
of  specifications  shall  be  given  at  all  times  full  force  and 
effect,  except  in  cases,  if  any,  in  which  they  conflict  with 
express  provisions  of  "Exhibit  B,"  in  which  cases  the  lat- 
ter shall  prevail.  The  provisions  of  this  ordinance  and 
those  of  "Exhibit  B,"  however,  shall  be  construed  to- 
gether, and  both,  so  far  as  practicable,  be  given  full  effect 
throughout  the  life  of  this  grant. 

EXTENSIONS. 

Sec.  3.  The  said  city  shall  have  the  right,  subject  to 
the  limitations  contained  in  this  ordinance,  at  any  time 
to  require  the  Company  to  make  extensions  of  and  addi- 
tions to  the  lines  of  street  railway  enumerated  in  said 
"Exhibit  A."  Such  extensions  and  additions  shall  be 
made  under  the  supervision  of  the  board  of  supervising 
engineers,  as  hereinafter  in  section  7  provided,  and  the 
cost  thereof  shall  be  determined  as  provided  in  said  sec- 
tion.    The  character  and  quality  of  such  work  shall  com- 


257 

ply  with  the  specifications  set  forth  in  said  "Exhibit  B," 
so  far  as  the  same  may  be  applicable  thereto. 

The  Company  shall  promptly  and  within  a  reasonable 
time  after  the  passage  of  this  ordinance  construct  and 
equip  the  extensions  of  its  street  railway  system  provided 
for  in  "Exhibit  A,"  and  also  in  section  36  hereof,  subject 
to  the  provisions  of  said  section,  and  shall  operate  same 
as  a  part  of  its  system  in  conformity  with  the  provisions 
of  this  ordinance,  arid  at  any  time  after  three  (3)  years 
from  the  acceptance  of  this  ordinance,  the  Company  shall 
upon  the  order  of  the  city  council  of  the  city,  construct 
and  equip  such  additional  extensions  as  may  be  required 
by  the  city  and  shall  operate  the  same  as  a  part  of  its 
system  in  conformity  with  the  provisions  of  this  ordi- 
nance; provided,  that  the  Company  shall  not  be  obligated 
hereby  to  construct  and  operate  any  such  additional  ex- 
tension in  any  street  or  public  way  nearer  any  then  ex- 
isting parallel  street  railway  tracks  of  the  Company  than 
one-half  mile,  and  that  the  Company  shall  not  be  obli- 
gated hereby  to  construct  more  than  four  miles  of  double 
track  railway  or  eight  miles  of  single  track  railway  in 
any  one  calendar  year  during  the  term  of  this  grant. 

The  Company  shall,  however,  upon  the  order  of  the 
city  council  of  the  city,  construct,  equip  and  operate  such 
extensions  of  its  street  railway  system  in  addition  to 
those  hereinabove  provided  for  as  may  be  required  by 
the  city  council  subject  to  the  conditions  and  limitations 
contained  in  section  25  of  this  ordinance. 

The  Company  shall  not  be  authorized  or  obligated  to 
construct  any  extension  of  its  street  railway  system  upon 
streets  on  which  street  railways  are  not  located  when 
this  ordinance  goes  into  effect  until  the  city  has  granted 


258 

to  the  Company  whatever  authority  in  addition  to  this 
ordinance  may  be  necessary  to  comply  with  the  frontage 
consent  laws  of  the  State  of  Illinois. 

MOTIVE   POWER. 

Sec.  4.  The  motive  power  to  be  used  in  the  operation 
of  said  street  railways  shall  be  electricity,  applied  by  the 
overhead  trolley  system  or  otherwise,  as  more  particu- 
lary  set  forth  in  said  "Exhibit  B" ;  provided  that  the  said 
city  (subject  to  the  limitations  contained  in  section  25 
hereof),  at  any  time  after  three  years  from  the  date  of 
the  acceptance  of  this  ordinance,  may  require  by  ordi- 
nance, that  the  Company  shall  operate  under  the  pro- 
visions of  this  ordinance  any  of  its  street  railways  herein 
authorized  by  electric  power  transmitted  through  work- 
ing conductors  carried  in  conduits  below  the  surface  of 
the  street  and  between  and  underneath  the  rails,  other- 
wise known  as  the  underground  trolley  system,  and  shall 
thereafter  cease  to  operate  the  same  by  overhead  trolley. 

USB  OF  POLES^  CONDUITS^  ETC. 

Sec.  5.  The  Company  may  use  its  trolley  poles,  feeder 
poles,  trolley  wires,  feeder  wires  and  the  conduits  author- 
ized and  provided  for  in  said  Exhibit  B,  for  all  purposes 
solely  connected  with  the  operation  of  its  street  railways, 
such  as  power,  light,  heat  and  telephonic  and  other  sig- 
nals. For  such  purposes  the  Company  may  connect  such 
conduits,  poles  and  wires  with  its  transmission  and 
feeder  wires,  power  plants,  substations,  car  houses, 
repair  shops  or  other  property  of  the  Company,  and  with 
any  transmission,  feeder  or  other  wires  of  any  other  in- 
dividual or  corporation. 


259 

JOINT  USE  WITH  THE  CITY. 

The  said  city  shall  have  the  right,  without  the  pay- 
ment of  any  compensation  therefor,  during  the  life  of 
this  grant,  to  use  the  poles  of  the  Company  to  carry  the 
signal,  telephone,  telegraph  and  electric  light  wires  and 
lamps  of  the  said  city.  The  transmission  wires  of  the 
said  city  for  such  purposes  shall  be  placed  on  poles  of 
the  Company,  on  that  side  of  each  street  or  way  (where 
poles  are  located  on  both  sides  thereof)  designated  by 
the  said  board  of  supervising  engineers,  without  cost  or 
expense  to  the  Company,  hut  the  Company  shall  repair 
and  maintain  its  poles  as  one  of  the  operating  expenses 
of  the  said  street  railway  system  under  this  ordinance; 
provided,  that  the  said  city  shall  indemnify  and  save 
harmless  the  Company  against  and  from  all  damages, 
judgments,  costs  or  expenses  which  the  Company  may 
suffer  by  reason  of  any  negligence  of  the  said  city  in  in- 
stalling, maintaining  or  using  its  said  wires  and  lamps 
upon  said  poles. 

SUBWAYS. 

Sec.  6.  The  Company  hereby  gives  to  said  city  and 
said  city  reserves  the  power  by  ordinance  to  require  the 
Company  to  join  with  the  Chicago  Railways  Company 
and  with  the  said  city  in  defraying  the  cost  of  the  con- 
struction of  a  system  of  subways  for  the  joint  use  of  the 
said  companies  as  down  town  terminals  of  their  street 
railway  systems,  and  for  the  use  of  said  city  and  of  its 
licensees,  the  legal  title  to  said  subways  to  be  in  said  city, 
subject  to  the  rights  of  the  said  companies  under  this 
ordinance,  it  being,  however,  an  express  condition  of  the 
Company  being  required  to  join  in  defraying  the  cost  of 
such  construction  of  such  system  of  subways,  that  said 
subway  system  and  the  extension   thereof  shall  not  be 


260 

used  for  street  railway  purposes  during  the  life  of  this 
grant  except  by  the  street  railway  systems  of  said  com- 
panies; provided,  that  the  companies  shall  not  be  re- 
quired to  contribute  to  the  cost  of  said  subway  system 
any  amount  in  excess  of  the  pro  rata  cost  of  that  part 
of  said  subway  system  which  is  to  be  devoted  to  the  use 
of  said  companies  or  either  of  them  and  that  the  total 
amount  which  the  said  companies  shall  be  required  to 
contribute  toward  the  construction  of  said  system  of  sub- 
ways shall  not  exceed  the  sum  of  five  million  dollars 
(15,000,000),  exclusive  of  the  cost  of  (1)  reconstructing 
the  present  tunnels  under  the  Chicago  river,  (2)  or  of 
converting  said  tunnels  into  a  part  of  said  system  of  sub- 
ways. Two-fifths  of  that  part  of  the  cost  of  the  said 
subways  (exclusive  of  the  tunnels  under  the  Chicago 
river),  payable  by  said  companies  shall  be  borne  by  the 
Company  and  three-fifths  of  the  said  cost  shall  be  borne 
by  said  Chicago  Railways  Company;  and  provided,  fur- 
ther, the  Company  shall  not  be  obligated  to  join  in  de- 
fraying the  cost  of  the  construction  of  such  subway  sys- 
tem until  (1)  the  said  city  shall  authorize  the  construc- 
tion of  said  subway  system  by  an  ordinance  which  shall 
prescribe  the  location,  character  and  extent  of  said  sub- 
way system  and  the  plans  and  specifications  therefor, 
which  plans  and  specifications  shall  include  provisions 
specifying  the  portions  thereof  to  be  devoted  to  the  use 
of  said  companies,  respectively,  and  to  the  use  of  the 
said  city  and  its  licensees,  and  regulating  the  manner  of 
such  uses,  and  specifying  the  share  of  the  cost  of  such 
subway  system  to  be  borne  by  said  companies  and  the 
extent  of  the  user  to  which  each  said  company  shall  be 
entitled  in  that  part  of  said  subway  system  devoted  to 
street  railway  purposes,  and  until,  (2)  the  board  of 
supervising  engineers  shall  approve  the  location,  charac- 


261 

ter  and  extent  of  and  the  plans  and  specifications  for 

such  subway  system.     The  limitation  of  five  million  dol- 
lars as  above  defined  shall  apply  to  the  subway  system 

above  mentioned,  but  shall  have  no  application  to  the  ex- 
tensions and  additions  herein  next  mentioned. 

When  said  subway  system  shall  have  been  fully  com- 
pleted (but  not  before  the  expiration  of  five  years  from 
and  after  the  acceptance  of  this  ordinance)  the  Company 
(subject  to  the  limitations  contained  in  section  25  here- 
of) may  l)e  required  by  ordinance  to  join  with  the  said 
Chicago  Railways  Company  and  with  the  said  city  in 
defraying  the  cost  of  the  construction  of  extensions  and 
additions  to  such  subway  system  and  the  Company 
agrees  that  it  will  pay  to  the  said  city  the  pro  rata  cost 
of  constructing  that  portion  of  such  extensions  which  is 
to  be  devoted  to  the  use  of  the  Company  and  its  propor- 
tionate part  of  the  pro  rata  cost  of  constructing  that 
portion  of  such  extensions  which  is  to  be  devoted  to  the 
joint  use  of  the  said  companies;  provided,  however,  the 
Company  shall  not  be  obligated  to  join  in  defraying  the 
cost  of  the  construction  of  such  extensions  and  additions 
to  said  subway  system  until  (1)  the  said  city  shall  au- 
thorize the  construction  of  said  extensions  and  additions 
by  an  ordinance  which  shall  prescribe  the  location,  char- 
acter and  extent  of  said  extensions  and  additions  and  the 
plans  and  specifications  therefor,  which  plans  and  speci- 
fications shall  include  provisions  specifying  the  portions 
to  be  devoted  to  the  use  of  said  companies  and  to  the 
use  of  said  city  and  its  licensees,  and  regulating  the  man- 
ner of  such  uses  and  specifying  the  part  of  the  total  es- 
timated cost  of  such  extensions  and  additions  to  be  borne 
by  the  said  companies,  respectively,  and  until  (2)  the 
location,  character  and  extent  of  said  extensions  and  ad- 
ditions and  the  plans  and  specifications  therefor  shall  be 
approved  by  the  said  board  of  supervising  engineers. 


262 

The  provisions  of  this  ordinance  under  which  the  said 
Company  obligates  itself  to  contribute  to  the  cost  of  con- 
structing subways  and  extensions  of  subways  and  fixing 
the  conditions  under  which  the  said  Company  is  so  ob- 
ligated shall  not  have  the  effect  or  be  construed  to  have 
the  effect  of  depriving  the  said  city  of  any  right  which 
the  said  city  may  have  or  acquire  (otherwise  than  by 
virtue  of  this  ordinance)  to  construct  subways  or  exten- 
sions thereof,  or  to  compel  said  Company  to  contribute 
to  the  cost  of  such  subways  or  extensions,  or  to  compel 
said  Company  to  use  the  subways  in  whole  or  in  part,  in 
connection  with  its  street  railways  or  to  fix  the  terms 
and  conditions  of  such  use.  By  the  acceptance  of  this 
ordinance  the  Company  admits  that  the  city  has  the  right 
and  authority  to  construct  subways  and  extensions  of 
subways  in  the  streets  and  parts  of  streets  described  in 
"Exhibit  A"  and  in  all  other  streets  or  parts  of  streets 
in  which  the  Company  is  now  or  hereafter  authorized  to 
construct  or  orperate  street  railways  and  the  Company 
by  such  acceptance  consents  to  the  exercise  of  such  right 
by  the  city;  but  the  Company  by  the  acceptance  of  this 
ordinance  shall  not  be  construed  as  admitting  that  the 
city  now  has  any  right  otherwise  than  by  virtue  of  this 
ordinance  to  compel  said  Company  to  contribute  to  the 
cost  of  any  subway  or  extension  thereof,  or  to  compel 
said  Company  to  use  subways  in  whole  or  in  part  in  con- 
nection with  its  street  railways  or  to  fix  the  terms  and 
conditions  of  such  use,  or  that  it  could  acquire  such 
right,  and  the  exercise  by  the  city  of  any  such  right  shall 
not  impair  or  in  anywise  affect  the  rights  of  the  Com- 
pany under  the  provisions  of  this  ordinance  in  that  part 
of  any  subway,  or  extensions  thereof,  to  the  cost  of  con- 
j?tructing  which  the  Company  shall  have  contributed. 


263 

Nothing  in  this  ordinance  contained  shall  be  construed 
to  give  the  said  city  the  power  to  require  the  Company 
in  case  of  the  construction  of  said  subway  system,  or  ex- 
tensions and  additions  thereto,  and  the  placing  of  its 
railway  tracks  therein,  or  in  a  part  thereof,  to  cease  the 
operation  of  its  railway,  during  the  life  of  this  grant, 
upon  the  surface  of  any  of  the  streets  or  parts  of  streets 
under  which  the  said,  subway  system,  or  said  extensions 
and  additions  thereto,  may  be  constructed,  so  long  as  or 
whenever  the  city  shall  permit  the  construction  or  opera- 
tion of  any  street  railways  upon  the  surface  of  such 
streets  or  parts  of  streets,  respectively. 

It  is  expressly  provided  that  in  case  the  capacity  of 
that  portion  devoted  to  street  railway  purposes,  of  any 
subways  or  extensions  of  subways,  constructed  under  the 
provisions  of  this  section  of  this  ordinance,  shall  at  any 
time  be  greater  than  necessarily  and  properly  required 
for  the  use  of  the  said  company  or  companies  which  have 
contributed  to  the  cost  of  said  subways  or  extensions 
thereof  in  the  operation  of  their  street  railways  therein, 
the  city  may  authorize  or  require  any  other  Company 
operating  elevated  railways  in  said  city  to  use  said  sub- 
ways and  extensions,  or  parts  thereof,  to  the  extent  of 
such  surplus  capacity,  but  only  to  such  extent,  provided 
that  such  Company  shall  pay  a  reasonable  rental  for 
such  use  by  it,  which  rental  shall  be  apportioned  between 
the  parties  who  have  contributed  to  the  cost  of  construct- 
ing the  portion  of  such  subways  or  extensions  so  used 
by  such  other  company  in  proportion  to  the  extent  of 
their  respective  contributions;  and  the  portion  of  such 
rental  so  paid  to  the  Chicago  City  Railway  Company 
shall  be  considered  and  treated  as  part  of  its  gross  re- 
ceipts, to  be  disposed  of  under  the  provisions  of  this 
ordinance  as  other  gross  receipts  from  the  operation  of 


264 

the  street  railways  of  said  Company  are  to  be  disposed 
of.  The  city  shall  have  the  right  to  use  the  said  subways 
and  extensions  for  any  elevated  railway  belonging  to 
said  city  to  the  same  extent  and  upon  the  same  terms 
that  it  may  authorize  or  require  their  use  by  any  elevated 
railway  company. 

CITY  TO  HAVE  SUPERVISION  OF   REHABILITATION. 

Sec.  7.  All  of  the  construction,  re-construction,  equip- 
ment, re-equipment,  extensions  and  additions  to  plant 
and  property  provided  for  or  required  by  this  ordinance 
or  the  exhibits  thereto,  including  underground  trolleys, 
new  lines,  extensions,  and  other  additions  to  plant  and 
property  (but  not  subways  or  extensions  thereof),  shall 
be  done,  performed  and  acquired  by  the  Company  under 
the  direction  and  supervision  of  said  board  of  supervis- 
ing engineers,  and  the  cost  and  expense  thereof  shall  be 
borne  and  paid  by  the  Company,  but  no  contract,  sub- 
contract or  payment  therefor  shall  be  made  without  the 
written  approval  of  said  board. 

The  Company  shall  purchase  materials  and  equipment, 
and  employ  engineers,  superintendents,  clerks,  foremen 
and  workmen  and  shall  pay  all  expenses  of  every  nature, 
including  legal  expenses  necessary  to  the  proper,  com- 
plete and  prompt  performance  of  the  above  mentioned 
work,  upon  the  lowest  advantageous  terms  and  subject 
to  the  approval  of  the  said  board  of  supervising  en- 
gineers, and  to  the  actual  amount  paid  by  the  Company 
in  and  about  carrying  out  each  and  all  of  the  require- 
ments of  this  section,  shall  be  added  10  per  cent  of  such 
amount  as  a  fair  and  proper  allowance  to  the  Company 
for  conducting  the  said  work  and  furnishing  said  equip- 
ment and  5  per  cent  for  its  services  in  procuring  funds 
therefor,  including  brokerage. 


265 

The  said  board  of  supervising  engineers  shall,  on  or 
before  the  fifteenth  day  of  each  month,  make  a  report  in 
writing,  dated  the  first  day  of  such  month,  to  the  city 
comptroller  of  the  amount  of  money  actually  expended 
during  the  previous  month  by  the  Company  with  the  ap- 
proval of  said  board  of  supervising  engineers  in  and 
about  carrying  out  the  requirements  of  this  section  to- 
gether with  the  percentages  of  such  amount  in  the  next 
preceding  paragraph  provided  for,  and  all  amounts  con- 
tributed by  the  Company  to  the  cost  of  the  said  subway 
system  or  extensions  thereof  together  with  5  per  cent 
of  the  amounts  so  contributed;  and  the  interest  provided 
in  section  24  hereof  as  a  deduction  from  gross  receipts 
shall  begin  to  run  upon  the  total  amount  of  each  such 
certificate  from  and  after  the  date  thereof. 

The  total  amount  so  certified  by  the  said  board  of  su- 
pervising engineers  (including  the  said  additional  per- 
centages thereof  as  hereinabove  provided)  shall  be  final 
and  binding  upon  both  parties  hereto  and  shall  be  con- 
clusively held  and  taken  as  the  cost  of  the  said  construc- 
tion, reconstruction,  equipment,  re-equipment,  extensions 
and  additions  to  plant  and  property,  including  subways, 
underground  trolleys,  new  lines,  and  other  additions  to 
plant  and  property,  which  shall  be  paid  by  the  said  city 
upon  the  taking  over  of  the  said  street  railway  system 
as  in  this  ordinance  provided,  except  that  said  board 
may  at  any  time  within  sixty  (60)  days  after  the  date 
of  any  such  certificate  correct  any  error  or  omission 
therein. 

The  said  board  of  supervising  engineers  shall  have 
power  to  determine  what  work  shall  be  treated  as  con- 
struction, reconstruction,  equipment,  re-equipment,  ex- 
tensions, new  lines,  underground  trolleys  or  additions 
to  plant  or  property  to  be  paid  for  by  the  Company  out 


266 

of  the  capital  funds  to  be  provided  by  it  for  that  pur- 
pose, and  what  shall  be  treated  as  maintenance,  repairs 
and  renewals,  to  be  paid  for  out  of  the  gross  receipts  of 
the  Company  from  the  operation  of  the  street  railway 
system  hereby  authorized.  But  any  such  determination 
of  said  board  shall  be  governed  by  the  following  pro- 
visions : 

During  the  three  (3)  year  period  of  "immediate  reha- 
bilitation" seventy  (70)  per  cent  of  the  gross  receipts 
shall  be  set  apart  and  shall  be  used  so  far  as  required 
in  defraying  the  operating  expenses,  including  mainte- 
nance and  repairs,  and  the  residne  of  said  seventy  (70) 
per  cent  shall  be  applied  to  the  cost  of  renewals  and  no 
part  of  the  cost  of  any  renewal  paid  for  out  of  such  sev- 
enty (70)  per  cent  shall  be  charged  to  additional  capital, 
and  all  expenditures  for  renewals  during  said  three  (3) 
years  in  excess  of  such  residue  of  said  seventy  (70)  per 
cent  shall  be  charged  to  capital  account. 

After  such  three  (3)  year  period  of  "immediate  reha- 
bilitation," the  cost  of  renewals  shall  be  paid  as  provided 
in  section  16  hereof,  but  such  expenditures  (and  only 
such  expenditures)  as  are  made  for  the  purpose  of  exten- 
sions of  or  additions  to  property  shall  be  thereafter  con- 
sidered as  additions  to  capital,  provided,  however,  that 
in  the  replacement  of  any  principal  part  of  the  property, 
either  existing  or  hereafter  acquired,  there  shall  be 
charged  to  capital  the  excess  amount  that  the  new  prop- 
erty cost  over  the  original  cost  of  the  property  displaced, 
excepting  that  the  value  of  property  contained  in  the 
appraisal  inventory  of  the  property  of  the  Company, 
referred  to  in  paragraph  1  of  section  20  hereof,  shall  be 
used  instead  of  first  cost  for  all  property  listed  in  such 
appraisal  inventory. 


267 

BBMOVAL  OF   TRACKS. 

Sec.  8.  The  Company  shall  forthwith  remove  all 
tracks  now  owned  or  operated  by  it  which  it  is  not  ex- 
pressly authorized  by  this  ordinance  hereafter  to  main- 
tain and  operate.  If  it  shall  hereafter  cease  to  operate 
over  any  of  its  tracks  or  any  portion  thereof,  it  shall  re- 
move such  unused  tracks  upon  the  order  of  the  city  coun- 
cil. Failure  to  operate  cars  for  the  carriage  of  passen- 
gers at  least  once  each  way  within  every  hour  of  each 
day  between  the  hours  of  six  (6)  A.  M.  and  eight  (8) 
P.  M.  over  any  part  of  a  street  or  public  place  in  which 
tracks  of  the  Company  are  laid,  shall  be  treated  as  a 
cessation  of  operation  of  its  tracks  in  such  part  of  street 
or  public  place  within  the  meaning  of  this  section,  unless 
such  operation  is  interfered  with  by  unavoidable  acci- 
dents, labor  strikes  or  litigation  brought  without  conniv- 
ance of  the  Company;  provided,  however,  that  the  fore- 
going provisions  of  this  section  shall  not  be  construed 
to  require  or  authorize  the  removal  of  curves  or  turn-outs 
or  of  connecting  tracks  specifically  authorized  by  this 
ordinance  or  the  exhibits  hereto  to  be  constructed  and 
maintained  for  use  during  rush  hours  or  for  emergency 
use  in  case  of  fire  or  accident,  or  such  tracks  as  may 
be  necessary  for  a  connection  with  the  Company's  prop- 
erty used  for  street  railway  purposes. 

The  city  shall  have  the  right  by  ordinance  to  require 
the  Company  to  remove  any  tracks  or  portions  thereof, 
the  further  maintenance  of  which  is  at  any  time  no 
longer  warranted  by  the  traffic,  or  reasonably  required 
in  the  operation  of  the  said  street  railway  system,  pro- 
vided that  the  Company  shall  not  be  required  to  remove 
such  tracks  but  may  maintain  or  reconstruct  and  operate 
the  same  during  the  life  of  this  grant  so  long  as  or  when- 
ever the  city  shall  permit  the  construction  or  operation 


2G8 

of  any  street  railways  upon  the  streets  or  parts  of  streets 
respectively  from  which  such  tracks  have  been  so  re- 
quired to  be  removed  and  in  every  case  of  removal  of 
tracks  as  aforesaid,  the  Company  shall  restore  the  street 
or  public  way  to  the  condition  of  the  other  portion  there- 
of, all  at  its  own  cost,  such  cost  to  be  treated  as  an  oper- 
ating expense. 

If  the  Company  shall  fail  within  a  reasonable  time  (not 
to  exceed  30  days)  to  remove  any  such  tracks  on  order 
of  the  commissioner  of  public  works,  the  said  city  may 
remove  them,  charging  the  expense  thereof  to  the  Com- 
pany; provided,  however,  that  nothing  in  this  section 
contained  shall  relieve  the  Company  from  its  obligations 
at  all  times  to  render  adequate  service  on  its  street  rail- 
ways. 

RIGHT   TO    SELL    UNNECESSARY    PROPERTY. 

Sec.  9.  The  Company  shall  not  hereafter  sell  any  of 
the  property  belonging  to  it  at  the  time  of  the  passage 
of  this  ordinance  (except  that  described  in  "Exhibit  D") 
or  thereafter  acquired  by  it  as  an  addition  to  or  exten- 
sion of,  or  for  use  in  connection  with  its  said  street  rail- 
ways, except  as  the  same  may  become  unnecessary  or  un- 
adapted  to  the  proper  operation  and  maintenance  of  said 
street  railways  under  the  terms  of  this  ordinance,  and 
before  making  any  such  sale  the  Company  shall  secure 
the  written  approval  of  such  sale  and  of  the  amount  and 
terms  thereof  by  the  said  board  of  supervising  engineers, 
and  such  written  approval  of  said  board  shall  be  con- 
clusive of  the  right  of  the  Company  to  transfer  complete 
title  to  the  purchaser,  who  shall  not  be  obliged  to  look 
to  the  application  of  the  proceeds  of  such  sale. 

In  the  event  of  any  such  sale  made  during  the  period 
of  "immediate  rehabilitation,"  the  proceeds  shall  be  de- 
ducted from  the  amount  allowed   to  the  Company  for 


269 

such  reconstruction,  and  in  the  event  of  a  sale  after  sucli 
"immediate  rehabilitation"  is  completed,  the  proceeds 
thereof  shall  be  deposited  with  the  depositary  or  deposi- 
taries selected  under  tlie  provisions  of  section  16  of  this 
ordinance  and  shall  constitute  a  part  of  and  an  addition 
to  the  reserve  fund  provided  for  in  said  section  for  re- 
newals and  depreciation. 

SERVICE  REGULATIONS. 

Sec.  10.  The  Company  hereby  agrees  to  comply  with 
all  reasonable  regulations  of  the  service  of  the  said  street 
railway  system  which  may  be  prescribed  from  time  to 
time  by  the  city  council  of  said  city  and  that  the  ap- 
proval of  any  such  regulation  by  the  board  of  supervising 
engineers  shall  be  binding  upon  the  Company  (but  not 
upon  the  city)  as  to  the  reasonableness  thereof. 

STYLE  OF   CARS. 

All  passenger  cars  operated  by  the  Company  shall  be 
used  for  the  carriage  of  passengers  only.  All  such  cars 
hereafter  built  or  purchased  shall  be  of  the  best  and  most 
approved  finish,  style  and  design  to  be  approved  by  the 
board  of  supervising  engineers;  they  shall  have  center 
aisles;  they  shall  be  without  running  footboards  along 
the  sides,  and  shall  be  equipped  with  sufficient  motor 
capacity.  Cross-seats  facing  forward  shall  be  used,  but 
longitudinal  seats,  each  seating  not  more  than  four  pas- 
sengers, may  be  used  at  the  ends  of  the  cars.  All  closed 
cars  shall  be  vestibuled,  and  shall  be  of  the  style  and  de- 
scription specified  and  provided  in  said  "Exhibit  B,'' 
and  at  least  one  hundred  fifty  (150)  cars  of  such  descrip- 
tion shall  be  acquired  by  and  placed  in  operation  upon 
the  tracks  of  the  Company  within  one  (1)  year  from 
the  passage  of  this  ordinance,  exclusive  of  delays  occa- 


270 

sioned  by  strikes  or  other  causes  beyond  the  control  of 
the  Company. 

PUSH  BUTTONS. 

All  cars  operated  by  the  Company  shall  be  supplied 
Tvath  a  sufficient  number  of  electric  bells,  connections  and 
push  buttons  to  enable  passengers  without  inconvenience 
to  notify  the  conductor  of  their  desire  to  leave  the  car. 

FENDEES. 

All  cars  shall  be  equipped  with  efficient  and  service- 
able fender  devices,  headlights  and  sand-boxes. 

BRAKES. 

Each  double-truck  car  shall  be  equipped  with  two  sets 
of  brakes,  one  of  which  shall  be  a  hand-brake  and  the 
other  an  efficient  power-brake  of  modern,  improved  type. 

CLEANLINESS    AND    VENTILATION. 

Said  cars  shall  at  all  times  be  kept  clean  and  in  good 
repair,  and  shall  be  thoroughly  ventilated. 

HEATING. 

The  said  cars  shall  be  kept  heated  at  the  temperature 
of  fifty  (50)  degrees  Fahrenheit,  as  nearly  as  practica- 
ble, and  each  car  shall  contain  a  standard  thermometer 
appropriately  placed  to  enable  passengers  to  see  that  this 
provision  is  complied  with. 

LIGHTING. 

All  cars  shall  be  kept  well  and  sufficiently  illuminated 
by  electric  light  or  other  illuminants  approved  by  said 
Board  of  Supervising  Engineers. 

SIGNS. 

Each  car  shall  bear  appropriate  and  conspicuous  signs 
upon  both  its  sides  and  ends  so  placed  as  to  indicate, 


271 

both  day  and  night,  the  route  and  destination  of  such 
car.    At  night  such  signs  shall  be  illuminated. 

ADVBETISBMBNTS. 

The  company  may  permit  advertisements  in  its  cars, 
but  no  advertisement  shall  be  placed  upon  the  outside 
of  any  car,  and  only  the  space  between  the  top  of  the 
windows  and  the  transom  of  the  car  shall  be  used  for 
advertisements  on  the  inside  of  cars. 

FUNERAL   CARS   AND   MAIL   CARS. 

The  company  is  hereby  authorized  and  permitted  to 
operate  funeral  cars,  and  separate  cars  for  the  use  of  the 
United  States  Post  Office  Department,  for  the  carriage 
of  mail. 

SINGLE    CARS    ONLY. 

Every  electric  ear  shall  be  in  charge  and  under  the  con- 
trol of  two  competent  men,  a  motorman  and  a  conductor, 
and  (after  the  expiration  of  one  year  from  the  date  of 
the  passage  of  this  ordinance,  or  at  such  earlier  time  as 
the  company  shall  be  able  to  acquire  the  necessary  roll- 
ing stock  to  enable  it  to  abandon  trailers)  shall  be  oper- 
ated singly. 

BATES    OF    FARE. 

Sec.  11.  The  company,  except  as  to  chartered  cars  to 
private  parties  and  as  in  this  ordinance  provided,  shall 
be  entitled  to  charge  passengers,  during  the  term  of  this 
ordinance,  the  following  rates  of  fare,  to-wit : 

For  a  continuous  trip  in  one  general  direction,  within 
the  present  or  future  limits  of  the  city,  over  its  street 
railways  covered  by  this  ordinance  and  all  extensions 
thereof  (whether  owned,  leased  or  operated  by  it)  the 
sum  of  five  cents  (5c)  for  each  passenger  twelve  years 
of  age  or  over,  and  three  cents  (3c)   for  each  passenger 


272 

under  twelve  (12)  years  of  age;  provided  that  children 
under  seven  (7)  years  of  age  accompanied  by  a  person 
paying  fare  shall  be  permitted  to  ride  free. 

UNIVERSAL    TBANSFEES. 

Every  such  passenger  may  demand  and  upon  such  de- 
mand shall  receive  from  the  conductor  of  the  car  upon 
which  he  first  takes  passage,  or  from  some  authorized 
agent  of  the  company,  a  transfer.  Said  transfer  shall 
entitle  such  passenger  to  ride  upon  any  other  line  of  said 
sti'eet  railw^ay  system  owned,  leased  or  operated  by  the 
company  or  any  other  line  of  street  railway  operated  by 
any  other  corporation  from  which  the  company  is  by  this 
ordinance  obligated  to  accept  transfers,  which  connects 
with,  crosses,  intersects  or  comes  within  a  distance  of  two 
hundred  (200)  feet  of  the  line  of  said  street  railway  upon 
which  the  passenger  first  took  passage  and  paid  his  fare. 
But  this  obligation  shall  not  apply  to  any  connecting 
point  in  the  south  division  of  the  city  of  Chicago  north 
of  Twelfth  street,  except  that  upon  the  completion  and 
operation  of  subways  under  the  provisions  of  this  ordin- 
ance, transfers  shall  be  "given  at  all  points  within  said 
subways  where  lines  of  railway  of  any  such  corporation 
or  corporations  connect  with  each  other. 

The  payment  of  a  single  fare  shall  not  entitle  a  pas- 
senger to  reverse  his  general  direction  of  travel.  If 
necessary  to  enable  a  passenger  to  reach  his  destination 
the  conductor  or  other  authorized  agent  of  the  company 
shall  issue  without  additional  charge,  a  transfer  upon  a 
transfer,  the  same  as  required  upon  payment  of  a  cash 
fare;  the  intention  being  that  for  a  single  fare  the  com- 
pany shall  carry  any  passenger  for  a  single  continuous 
ride  over  any  of  the  said  lines  of  street  railway  owned, 
operated  or  leased  by  it,  within  the  limits  of  the  said 
city,  so  long  as  such  ride  is  in  the  same  general  direction, 


273 

although  some  of  the  lines  necessary  to  be  used  by  such 
passenger  in  arriving  at  his  destination  intersect  or  cross 
one  another,  or  do  not  conform  to  such  direction. 

In  every  instance  the  transfer  given  to  a  passenger 
may  designate  the  point  or  place  of  transfer,  and  the 
same  must  be  used  at  such  point  or  place,  within  a  rea- 
sonable time,  not  exceeding  fifteen  (15)  minutes  after 
such  point  or  place  is  reached  by  the  car  from  which  the 
passenger  is  transferred,  provided  that  within  said  fifteen 
minutes  a  car  shall  pass  such  point  or  place  of  transfer 
in  the  direction  and  upon  the  route  indicated  by  said 
transfer;  but  if  no  car  shall  pass  such  point  within  said 
time  the  passenger  shall  have  the  right  to  take  the  first 
available  car  passing  such  point  in  the  direction  indicated 
upon  the  passenger's  transfer.  A  passenger  upon  any 
car  delayed  through  the  fault,  negligence  or  inability  of 
the  company  shall  be  entitled  to  receive  a  transfer  to  a 
car  upon  the  nearest  line  of  the  company  going  in  the 
same  general  direction  as  the  delayed  car. 

The  company  shall  also  on  its  cars  accept  and  honor  as 
fares,  transfers  issued  to  passengers  upon  any  line  of 
street  railway  covered  or  authorized  by  the  said  ordin- 
ance to  the  Chicago  Railways  Company,  hereinabove  re- 
ferred to  as  presented  for  passage  in  the  city  council  of 
said  city,  concurrently  with  this  ordinance,  which  con- 
nects with  any  of  said  lines  of  the  company,  under  the 
same  conditions  and  with  like  effect  as  though  both  lines 
of  street  railway  were  owned  by  the  company  and  the 
transfers  were  issued  under  the  foregoing  provisions  of 
this  ordinance,  but  this  obligation  shall  not  apply  to  any 
connecting  points  north  of  Twelfth  street  and  east  of 
the  south  branch  of  the  Chicago  river  and  south  of  the 
main  Chicago  river,  except  that  upon  the  completion  and 
operation  of  subways  under  the  provisions  of  this  ordin- 


274 

ance,  transfers  shall  be  given  by  and  between  said  com- 
panies at  all  points  within  said  subways  where  their 
lines  of  railway  connect  with  each  other. 

The  company  shall  also  accept  and  hoL.or  as  fares 
transfers  issued  by  the  Chicago  General  Railway  Com- 
pany at  all  points  where  the  railway  lines  of  the  com- 
pany connect  with  or  intersect  the  lines  of  said  Chicago 
General  Eailway  Company,  constructed  and  in  operation 
at  the  time  of  the  passage  of  this  ordinance,  with  like 
effect  as  though  both  said  lines  of  street  railway  were 
owned  by  the  company  and  the  transfers  were  issued 
under  the  foregoing  provisions  of  this  ordinance;  upon 
condition,  however,  that  said  Chicago  General  Railway 
Company  shall  accept  and  honor  at  such  transfer  points, 
as  fares,  transfers  issued  by  the  company. 

The  said  proposed  arrangement  contemplates  that  in 
every  instance  the  street  railway  company  accepting  any 
such  transfer  shall  give  to  the  passenger  presenting  it 
the  same  accommodations  and  the  same  transfers,  if  re- 
quested, to  its  other  line  or  lines,  as  such  passenger  would 
be  entitled  to  receive  if  he  had  paid  a  cash  fare.  The 
company  shall  also  exchange  transfers  with  all  existing 
street  car  lines  operating  in  the  city  of  Chicago,  not  here- 
tofore mentioned,  under  reasonable  regulations  and  at  all 
points  of  connection  between  such  lines  and  the  lines  of 
tJie  company,  after  such  time  as  said  several  franchises 
of  said  other  lines  now  operating  shall  have  expired  and 
shall  be  extended  or  renewed. 

The  company,  acting  by  itself  or  in  conjunction  with 
the  other  companies  to  which  the  provisions  of  this  sec- 
tion apply,  may,  with  the  approval  of  the  said  Board  of 
Supervising  Engineers,  adopt  reasonable  rules  and  regu- 
lations not  inconsistent  with  the  provisions  of  this  ordin- 
ance, for  the  transfer  of  passengers  as  provided  for  here- 


276 

in,  and  for  the  prevention  of  the  fraudulent  use  of  trans- 
fer privileges. 

The  purchase  or  acquisition  by  the  city  or  its  licensee 
of  any  street  railway  or  railways  of  any  company  other 
than  the  Chicago  City  Railway  Company  shall  not  affect 
or  impair  the  obligations  of  the  company  under  the  pro- 
visions of  this  ordinance  with  regard  to  transfers  and 
through  routes  in  connection  with,  or  over  the  line  or 
lines  so  purchased  or  acquired,  but  the  same  shall  there- 
after continue  in  full  force  and  effect. 

NO  PASSES:    EMPLOYES^  POLICEMEN  AND  FIREMEN  FREE. 

Sec.  12.  No  passes  of  any  kind  or  description  shall 
be  issued  or  given  to  any  person,  and  no  person,  except 
employes  of  the  company,  policemen  and  firemen,  respec- 
tively, in  full  uniform,  shall  be  permitted  to  ride  upon 
any  street  railway  without  the  payment  of  fare;  provided 
that  the  company  may  issue  to  its  employes  free  tickets 
for  use  while  engaged  in  the  performance  of  their  duties, 
and  may  permit  them  to  ride  free  when  wearing  an  offi- 
cial badge  of  the  company  conspicuously  in  view.  The 
company  shall  keep  a  record  of  the  number  of  such  free 
tickets  and  to  whom  issued. 

MAIL  CARRIERS. 

In  the  event  that  the  United  States  Post  Office  Depart- 
ment shall  pay  to  the  company  a  sum  of  money  based 
upon  the  system  of  sales  of  tickets  in  effect  between  the 
postoffice  department  and  the  company  for  the  use  of 
letter  carriers  during  the  year  1906,  the  said  amount  of 
money  to  be  not  less  than  ten  thousand,  one  hundred, 
thirty-seven  dollars  and  seventy-five  cents  (|10,137.75) 
per  annum,  with  proportionate  increase  in  said  amount 
for  any  increase  in  the  number  of  letter  carriers  em- 
ployed in  the  city  of  Chicago  over  the  number  of  such 


276 

carriers  so  employed  in  the  year  1906,  then  the  company 
shall  carry  on  its  street  railways  United  States  letter 
carriers,  in  full  uniform,  at  all  times,  without  the  pay- 
ment of  fart. 

THEOUtiH    ROUTES. 

Sec.  13.  The  company  will  co-operate  with  any  corpor- 
ation operating  the  street  railway  in  Halsted  street,  from 
O'Neil  street  north,  to  operate  a  through  line  of  cars  in 
said  street.  Whenever  the  said  city  shall  so  direct  and 
shall  grant  to  the  company  and  to  any  corporation  oper- 
ating a  street  railway  north  of  the  South  Branch  of  the 
Chicago  river  in  Western  avenue  a  license  or  franchise  to 
connect  their  lines  in  said  avenue,  the  company  shall  co- 
operate with  such  other  corporation  to  operate  a  through 
line  of  cars  in  said  avenue;  also,  whenever  the  said  city 
shall  grant  to  the  company  and  to  any  corporation  oper- 
ating a  street  railway  north  of  the  South  Branch  of  the 
Chicago  river  in  Kedzie  avenue  a  license  or  franchise  to 
connect  their  lines  in  said  avenue,  the  company  will  co- 
operate with  such  other  corporation  to  operate  a  through 
line  of  cars  in  said  avenue;  and,  also,  whenever  the  said 
city  shall  grant  to  the  company  and  to  any  corporation 
operating  a  street  railway  in  Ashland  avenue  north  of 
the  South  Branch  of  the  Chicago  river  a  license  or  fran- 
chise to  connect  their  lines  in  said  avenue,  the  company 
shall  co-operate  with  such  other  corporation  to  operate  a 
through  line  of  cars  in  said  avenue;  and  said  corpora- 
tions shall  thereafter  operate  and  maintain  said  through 
lines  of  cars  in  the  said  streets  and  avenues,  respectively ; 
and  the  company  agrees  to  obtain  forthwith  the  right  to 
operate  its  cars  over  the  street  railways  on  Kedzie  avenue 
between  Thirty-first  street  and  Twenty-second  street  and 
on  Ashland  avenue  between  Archer  avenue  and  Twenty- 
second  street,  from  said  Chicago  General  Railway  Com- 


277 

pany,  and  to  use  that  right  in  the  establishment  of 
through  routes,  as  in  this  ordinance  provided,  so  long  as 
any  rights  of  said  Chicago  General  Railway  Company  in 
said  streets  shall  continue.  But  nothing  in  this  ordin- 
ance contained  shall  be  construed  as  enlarging  or  extend- 
ing any  right  of  said  Chicago  General  Railway  Company 
in  or  over  any  of  the  streets  of  the  city;  provided,  that 
the  company  shall  only  be  required  to  operate  said 
through  lines  across  or  over  any  river  or  canal,  when 
the  said  city  or  some  third  party  shall  provide  and  main- 
tain a  bridge  across  the  same  upon  which  it  may  operate 
its  cars. 

The  company  will  co-operate  with  any  corporation  or 
corporations  operating  such  of  the  street  railway  lines 
now  operated  by  the  receivers  of  the  Chicago  Union  Trac- 
tion Company  as  may  be  parts  of  the  through  routes  in 
this  ordinance  or  in  Exhibit  C  referred  to  in  establishing 
and  maintaining  through  lines  of  cars  over  the  street 
railway  lines  of  the  company  and  the  street  railway  lines 
of  the  Union  Traction  system  entering  the  south  division 
of  the  said  city,  north  of  Twelfth  street,  which  shall 
carry  passengers  from  the  south  division  of  the  said  city 
to  the  other  two  divisions  of  the  said  city,  or  in  the  re- 
verse directions,  through  the  portion  of  the  south  divi- 
sion of  said  city  north  of  Twelfth  street,  for  a  single  fare. 

As  many  cars  shall  be  operated  upon  said  through  lines 
as  the  traffic  shall  require  and  warrant. 

The  parties  now  concerned  have  agreed  upon  certain 
through  routes  which  are  particularly  described  in  Ex- 
hibit C,  which  is  attached  hereto  and  made  a  part  hereof, 
with  the  same  force  and  effect  as  if  herein  fully  set  out. 

The  company  may  establish  other  through  routes  from 
time  to  time  and  may  discontinue  the  same,  if  and  when 
the  traffic  warrants  such  establishment  or  discontinuance; 


278 

but  no  through  route  specifically  established  by  this  or- 
dinance and  said  Exhibit  C  shall  be  discontinued  with- 
out the  consent  of  the  city  council  of  said  city,  and  the 
city  may  by  ordinance  at  any  time  require  the  company 
to  re-establish  any  through,  route  and  to  establish  new 
and  additional  through  routes  whenever  the  traffic  war- 
rants or  requires  such  establishment  or  re-establishment; 
provided,  however,  that  if  the  company  shall  consider 
that  the  traffic  does  not  in  fact  warrant  or  require  the 
establishment  or  re-establishment  of  any  through  route 
so  required  by  the  city  to  be  established  or  re-established, 
then  in  such  case  it  shall  be  the  duty  of  the  Board  of 
Supervising  Engineers,  upon  demand  either  of  the  city 
or  of  the  company  to  furnish  the  certificate  of  said  board 
certifying  as  to  whether  or  not,  in  the  opinion  of  said 
board,  the  traffic  does  warrant  or  require  the  establish- 
ment or  re-establishment  of  such  through  route,  and  such 
certificate  of  the  Board  of  Supervising  Engineers  shall 
be  prima  facie  evidence  as  to  whether,  in  fact,  the  traffic 
does  or  does  not  warrant  or  require  the  establishment  or 
re-establishment  of  such  through  route;  and  the  obliga- 
tion of  the  company  in  respect  to  such  routes  shall  be 
governed  by  such  certificate  pending  a  judicial  determin- 
ation of  its  obligations  in  respect  to  the  establishment  or 
re-establishment  of  any  such  through  route  under  this 
ordinance. 

The  through  routes  herein  mentioned  shall  be  estab- 
lished and  put  in  operation  immediately  after  the  neces- 
sary recpnstruction  of  the  tracks  covered  by  such  routes. 

To  carry  out  the  establishment  of  the  through  lines 
provided  for  in  this  section,  the  company  will  enter  into 
a  reasonable  operating  agreement  approved  by  the  said 
Board  of  Supervising  Engineers,  with  any  other  corpor- 
ation  or   corporations  concerned,  whenever   required  by 


279 

the  said  city.  If  the  company  and  the  corporation  or 
corporations  operating  the  lines  of  street  railway  consti- 
tuting said  through  routes,  or  any  of  them,  shall  be  un- 
able or  fail  to  agree  upon  terms  as  between  themselves 
for  establishing,  maintaining  and  operating  all  of  said 
through  routes  within  sixty  (60)  days  after  the  passage 
of  this  ordinance,  then  and  in  such  case  it  shall  be  the 
duty  of  tbe  Board  of  Supervising  Engineers  to  fix  and 
determine  the  basis  and  terms,  as  between  said  company 
and  said  corporation  or  corporations,  upon  which  said 
through  routes  shall  be  established,  maintained  and  oper^ 
ated  and  to  notify  each  of  the  companies  operating  the 
lines  of  street  railway  constituting  said  through  routes 
of  said  basis  and  terms,  and  thereupon  it  shall  be  the 
duty  of  the  company  to  proceed  forthwith  to  establish, 
maintain  and  operate  said  through  routes  upon  the  basis 
and  terms  so  fixed  and  determined  by  said  Board  of  Sup- 
ervising Engineers.  Said  companies  may  by  agreement 
(with  the  approval  of  said  Board  of  Supervising  En- 
gineers) modify  such  basis  and  terms  or  they  falling  to 
agree,  the  Board  of  Supervising  Engineers  may  from 
time  to  time  modify  said  basis  and  terms  as  to  said  Board 
shall  seem  fit  and  just. 

Passengers  upon  the  through  cars  operated  upon  any 
through  routes,  while  traveling  over  the  tracks  of  each 
company  shall  be  entitled  to  the  same  facilities  as  to 
transfers  as  such  companies  shall  be  required  to  give  to 
their  own  passengers  paying  cash  fares. 

STREET    SPRINKLING    AND    CLEANING. 

Sec.  14.  The  company  ^all  sprinkle,  sweep,  keep  clean 
and  free  from  snow  that  portion  of  each  of  the  streets  oc- 
cupied by  its  right-of-way,  as  provided  in  Exhibit  B,  and 
if  it  shall  be  found  practicable  to  have  the  streets  oc- 


280 

eupied  bj  its  tracks  swept  and  sprinkled  their  entire 
width  by  the  company,  or  to  have  street  sweepings,  gar- 
bage or  other  refuse  removed  by  means  of  street  cars  at 
night,  the  company  shall  perform  said  service,  or  so  much 
thereof  as  shall  prove  practicable,  w^hen  so  ordered  by 
the  mayor  and  commissioner  of  public  works,  and  it 
shall  receive  for  such  service  reasonable  compensation. 
In  case  the  company  is  called  upon  to  remove  street 
sweepings  or  other  refuse,  the  said  city  shall  furnish  suit- 
able and  convenient  dumping  grounds  and  permit  the 
connection  of  the  company's  tracks  therewith.  The  com- 
pany shall  have  the  right  to  carry  on  suitable  cars  the 
snow  required  by  this  ordinance  to  be  removed  by  it,  and 
also,  materials  for  its  own  use  or  for  the  use  of  the  said 
city,  and  to  connect  its  tracks  and  wires  with  property 
necessary  to  be  used  for  such  purposes. 

STREET   PAVING. 

Sec.  15.  The  company  shall  at  its  own  expense  fill, 
grade,  pave  and  keep  in  repair  that  portion  of  the  streets 
occupied  by  it,  as  more  specifically  provided  for  in  said 
Exhibit  B. 

GROOVED  RAILS. 

All  new  tracks  hereafter  laid  and  all  tracks  in  streets 
hereafter  newly  paved  or  repaved  shall  be  of  grooved  pat- 
tern more  particularly  described  in  said  Exhibit  B. 

MAINTENANCE,   REPAIRS^   RENEWALS  AND   DEPRECIATION. 

Sec.  16.  After  the  expiration  of  the  three  (3)  year 
period  of  reconstruction  and  re-equipment,  particularly 
required  by  the  terms  of  said  Exhibit  B,  under  the  head- 
ing of  "Immediate  Eehabilitation"  and  until  the  rights 
conferred  upon  the  company  by  this  ordinance  are  ter- 
minated by  the  purchase  of  the  said  street  railway  sys- 
tem by  the  said  city  or  its  licensee  or  by  reason  of  the 


281 

default  of  the  company  or  otherwise,  the  company  at  all 
times  shall  maintain  the  said  street  railway  system  and 
its  entire  equipment,  plant  and  appurtenances  (including 
pavement  and  any  subways  or  extensions  thereof,  to- 
gether with  their  appurtenances  and  equipment,  which 
may  be  built  under  the  provisions  of  this  ordinance)  in 
first  class  condition,  by  making  from  time  to  time  such 
expenditures  thereon  for  maintenance,  repairs  and  re- 
newals, as  may  be  necessary  or  appropriate  to  give  to  the 
public  first  class  street  railway  service  in  all  respects.  To 
this  end,  the  company  shall  make  the  following  expendi- 
tures : 

(1)  The  company  shall  expend  for  maintenance  and 
repairs  during  each  and  every  year  that  the  company  con- 
tinues to  operate  said  street  railway  system  after  the  ex- 
piration of  the  said  three  (3)  year  period  of  "Immediate 
Rehabilitation,"  at  least  a  sum  equal  to  six  (6)  per  cent 
of  the  gross  receipts  for  the  particular  year,  and  if  the 
said  amount  is  not  so  expended  for  the  said  purpose  by 
the  company  during  any  one  year,  then  at  the  end  of 
such  year  the  unexpended  portion  thereof  shall  be  de- 
posited in  a  fund,  appropriately  designated,  with  one  or 
more  of  the  banks  or  trust  companies  authorized  to  act 
as  depositaries  of  such  funds,  under  the  terms  and  sub- 
ject to  the  conditions  of  this  ordinance  (herein  referred 
to  as  the  depository)  for  the  purpose  of  being  used  when- 
ever necessary  for  such  maintenance  and  repairs. 

The  said  depositaries  or  depositary  shall  make  pay- 
ment out  of  said  fund  upon  the  order  of  the  company, 
countersigned  by  the  said  Board  of  Supervising  En- 
gineers. 

(2)  On  or  before  the  fifth  (5th)  day  of  each  and 
every  month  of  each  and  every  year  that  the  company 


282 

continues  to  operate  said  street  railway  system  after  the 
expiration  of  said  three  (3)  year  period  of  "Immediate 
Rehabilitation,"  the  company  shall  deposit  with  one  or 
more  of  the  said  depositaries  in  a  separate  fund,  appro- 
priately designated,  a  sum  equal  to  eight  (8)  per  cent 
of  the  gross  receipts  of  said  street  railways  and  property, 
which  shall  constitute  a  reserve  fund,  for  taking  care  of 
renewals  and  depreciation  of  said  street  railways  and 
property  for  the  preceding  month;  and  out  of  the  said 
fund  the  Board  of  Supervising  Engineers  shall  from  time 
to  time  authorize  the  payment  by  the  company  of  such 
amounts  as  are  necessary  to  pay  for  renewals  of  the  said 
street  railways  and  property,  the  portion  of  said  fund 
remaining  unexpended  to  continue  in  said  fund  as  a 
provision  for  the  depreciation  of  said  street  railways  and 
property ;  and  shall  be  disposed  of  as  hereinafter  pro- 
vided. No  payments  shall  be  made  by  said  company  out 
of  said  fund  except  on  the  written  certificate  of  the  Board 
of  Supervising  Engineers  for  renewals,  which  are  hereby 
defined  to  be  the  replacement  of  any  principal  part  of 
said  street  railways  or  of  their  equipment  or  appurten- 
ances; and  the  Board  of  Supervising  Engineers  shall  de- 
termine by  classifications  made  from  time  to  time  what 
particular  items  of  expenditure  shall  be  considered  as 
renewals  and  what  particular  items  of  expenditure  shall 
be  considered  as  maintenance  and  repairs  under  the  pro- 
visions of  this  ordinance. 

The  whole  or  any  portion  of  such  reserve  fund  for 
maintenance  and  repairs  may  be  used  for  maintenance 
and  repairs  in  addition  to  the  annual  expenditure  for 
maintenance  and  repairs.  The  fixing  of  the  said  amount 
herein  as  the  minimum  amount  to  be  expended  annually 
for  maintenance  and  repairs,  and  the  fixing  of  the  said 
amount  herein  as  the  minimum  amount  to  be  deposited 


283 

for  renewals  and  depreciation,  shall  not  be  held  or  con- 
sidered as  lessening  or  limiting  in  any  way  the  obligation 
of  the  company  to  expend  w'hatever  sum  or  sums  may  be 
necessary  to  be  expended  for  maintenance  and  repairs 
and  to  expend  whatever  sum  or  sums  may  be  necessary 
for  renewals,  to  keep  the  said  street  railway  system  and 
equipment  in  first  class  condition  in  every  respect  and  at 
all  times. 

The  amounts  expended  or  deposited  respectively  as  re- 
serve funds,  under  the  foregoing  provisions  of  this  sec- 
tion, shall  be  considered  a  part  of  the  operating  ex- 
penses of  the  street  railway  system  hereby  authorized, 
but  in  the  event  that  the  said  street  railway  system  shall 
be  purchased  by  the  said  city  or  its  licensee  at  any  time 
under  the  provisions  of  this  ordinance,  the  amount  then 
on  deposit  in  each  of  said  reserve  funds,  or  due  to  be 
deposited  therein  at  the  time  of  such  purchase,  shall  be 
turned  over  to  and  become  the  property  of  the  said  city 
or  of  its  said  licensee. 

The  obligation  herein  assumed  by  the  company  as  to 
the  maintenance,  repairs  and  renewals  of  subways  and 
extensions  thereof,  shall  be  held  to  be  confined  to  that 
portion  of  any  such  subways  or  extensions,  together  with 
the  structures  and  the  appurtenances  and  equipment 
thereof,  which  may  be  used  by  or  be  subject  to  the  use 
of,  the  said  company  under  the  provisions  of  this  ordin- 
ance, and  to  its  fair  proportionate  share  of  the  cost  of 
maintenance,  repairs  and  renewals  of  that  part  of  any 
such  subway  or  extensions  or  the  appurtenances  or  equip- 
ment thereof,  w^hich  may  be  used  by  or  be  subject  to  the 
use  of  the  company  jointly  with  the  said  city  or  its 
licensees  or  with  the  said  Chicago  Railways  Company, 
such  proportionate  amount  to  be  fixed  and  determined 
by  the  Board  of  Supervising  Engineers. 


284 

INSURANCE. 

Sec.  17.  The  company  shall  at  all  times  keep  insured 
to  its  full  insurable  value,  in  responsible  companies,  all 
buildings,  cars  and  other  insurable  property,  against  loss 
by  fire,  and  the  premiums  for  such  insurance  shall  be 
paid  out  of  the  receipts  of  said  company,  as  one  of  the 
operating  expenses  thereof,  and  in  case  of  the  destruction 
or  damage  by  fire  of  any  such  property,  the  company  shall 
restore  the  same  or  its  substantial  equivalent  at  its  owti 
cost  and  not  out  of  the  receipts  of  its  said  street  rail- 
ways, or  in  lieu  of  such  restoration,  the  company  shall 
deposit,  as  a  part  of  the  reserve  fund  required  by  the 
preceding  Section  16,  ttie  value  of  the  property  so  de- 
stroyed or  damaged,  which  value  shall  be  estimated  by 
the  Board  of  Supervising  Engineers.  The  company  shall 
apply  to  any  such  deposit  or  to  the  cost  of  any  such  rest- 
oration the  insurance  moneys  received  on  account  of  any 
such  loss  or  damage.  If  such  moneys  are  not  equal  in 
amount  to  the  cost  of  such  restoration  or  to  the  amount 
of  the  said  deposit  hereinabove  required,  the  company 
will  at  its  own  cost  and  not  out  of  the  receipts  of  said 
street  railway  system  supply  any  deficit,  and  if  the 
amount  of  such  insurance  moneys  is  greater  than  the 
said  cost  or  deposit,  the  overplus  shall  be  deposited 
with  and  become  a  part  of  and  be  an  addition  to  the  fund 
provided  for  in  the  preceding  Section  16  for  renew^als 
and  depreciation. 

PERSONAL    INJURY    CLAIMS. 

Sec.  18.  Out  of  the  gross  receipts  derived  from  the 
operation  of  the  street  railway  system  hereby  authorized 
the  company  shall  pay  as  a  part  of  the  operating  expen- 
ses, all  damages  arising  or  growing  out  of  injuries  to 
persons  or  to  the  property  of  others  incident  to  the  con- 
struction, reconstruction  or  operation  of  said  street  rail- 


285 

way  system  accruing  subsequent  to  January  31st,  A.  D. 
1907,  and  the  company  may  set  aside  as  a  separate  fund 
such  percentage  of  said  gross  receipts  as  the  said  Board 
of  Supervising  Engineers  shall  estimate  to  be  sufficient 
to  protect  the  company  against  all  such  claims,  to  the 
end  that  if  the  said  city,  or  its  licensee,  shall  elect  to 
purchase  the  street  railway  property  of  the  company  as 
provided  by  this  ordinance,  there  shall  be  then  available 
to  the  company  a  fund  sufficient  to  meet  and  discharge 
all  legitimate  claims  for  such  damages.  The  percentage 
thus  reserved  may  be  changed  from  time  to  time  by  said 
Board  of  Supervising  Engineers  if  and  whenever  they 
shall  consider  that  the  percentage  theretofore  reserved  is 
either  inadequate  or  excessive. 

In  case  the  balance  of  said  fund  at  any  time  remaining 
shall  be,  in  the  judgment  of  the  Board  of  Supervising 
Engineers,  more  than  sufficient  to  protect  the  company 
against  all  then  unsettled  claims,  the  company  shall  pay 
to  the  said  city  fifty-five  (55^)  per  cent  of  the  estimated 
excess,  and  the  company  at  the  same  time  shall  be  en- 
titled to  apply  to  its  own  use  and  benefit  forty-five  (45^) 
per  cent  of  such  estimated  excess. 

If  the  city  or  its  licensee  shall  purchase  the  property 
of  the  company  as  in  this  ordinance  provided,  the  com- 
pany shall  deposit  with  one  or  more  of  the  depositaries 
herein  authorized  the  fund  then  accumulated  under  the 
provisions  of  this  section,  together  with  all  of  the  "net 
receipts"  of  the  company  from  the  operation  of  its  street 
railways  as  shall  not  have  been  divided  between  the  com- 
pany and  the  city  prior  to  the  giving  of  the  notice  by 
the  city  or  its  licensee  of  its  intention  to  purchase,  and 
the  company  shall  assume  and  pay  and  save  the  said  city 
or  such  licensee  harmless  from  all  such  claims  for  dam- 


286 

ages,  payment  for  the  same  to  be  made  out  of  the  fund 
so  deposited,  upon  the  order  of  the  company  counter- 
signed by  the  said  Board  of  Supervising  Engineers;  but 
if  the  fund  so  retained  and  deposited  shall  be  more  than 
sufficient  to  pay  and  discharge  said  claims  in  full,  then 
the  said  depositary  or  depositaries  shall  pay  to  the  said 
city  (or  its  licensee,  as  the  case  may  be)  fifty-five  (55) 
per  cent  of  such  excess  and  to  the  company  forty-five 
(45)  per  cent  of  such  excess. 

The  salaries  and  expenses  of  the  Board  of  Supervising 
Engineers  after  any  such  purchase  and  so  long  as  said 
board  shall  continue  to  act  under  the  provisions  of  this 
ordinance  shall  be  paid  out  of  the  fund  deposited  under 
the  provisions  of  this  section. 

REGULATION   OF   SALARIES. 

Sec.  19.  The  company  may  pay  to  the  directors,  offi- 
cers, agents  and  attorneys  of  the  company  as  a  part  of 
the  operating  expenses,  compensation  for  their  services 
commensurate  with  the  service  actually  rendered  by  them 
respectively,  taking  into  consideration  the  compensation 
paid  to  directors,  officers,  agents  and  attorneys  of  other 
corporations  or  enterprises  of  similar  magnitude  and 
general  character  for  like  services,  but  the  said  city  by 
writteA  notice  thereof  may  object  to  the  payment  there- 
after of  compensation  in  excess  of  an  amount  or  rate 
specified  in  such  objection  to  any  such  director,  officer, 
agent  or  attorney,  and  in  the  event  of  a  disagreement  be- 
tween the  company  and  the  said  city  as  to  the  proper 
amount  to  be  paid  as  such  compensation,  the  matter  shall 
be  submitted  to  the  judgment  of  the  said  Board  of  Sup- 
ervising Engineers  whose  decision  shall  be  final  and  bind- 
ing upon  the  parties,  except  that,  if  either  party  shall  be 
dissatisfied  with  such  decision  of  said  board,  then  such 
dissatisfied  party  may  make  application  to  any  court  of 


287 

comi)etent  jurisdiction  to  pass  upon  such  objection  and  to 
determine  the  amount  of  the  compensation  or  salary  to 
be  paid. 

BIGHT  OF  CITY  TO  PUECHASB  AT  ANY  TIME. 

Sec.  20.  The  company  by  the  acceptance  of  this  ordin- 
ance, shall  and  does  grant  to  the  said  city,  and  the  said 
city  hereby  reserves  to  itself  the  right,  upon  the  first 
day  of  February  or  upon  the  first  day  of  August  of  each 
and  any  year  after  such  acceptance  upon  giving  at  least 
six  (6)  months'  previous  notice  in  writing  of  its  inten- 
tion so  to  do,  to  purchase  and  take  over  (but  only  for 
municipal  operation  in  case  of  purchase  prior  to  Feb- 
ruary first,  A.  D.  1927),  the  entire  street  railway  system 
of  the  company  within  the  said  city,  including  all  prop- 
erty then  existing  which  now  constitutes  the  said  street 
railway  system  of  the  company  (except  such  as  is  en- 
umerated in  Exhibit  D  thereto  attached),  with  all  renew- 
als and  repairs  thereof,  and  including  all  the  property, 
franchises,  rights  and  claims  described  in  the  appraisal 
inventory  of  said  street  railway  system  as  of  June  30th, 
1906,  made  by  Bion  J.  Arnold,  Mortimer  E.  Cooley  and 
A.  B.  du  Pont,  a  copy  of  which  has  been  filed  with  the 
comptroller  of  the  said  city  on  the  fourth  day  of  Feb- 
ruary, A.  D.  1907,  except  such  as  may  have  been  sold  or 
extinguished  as  authorized  by  this  ordinance,  destroyed 
or  impaired  (ordinary  wear  excepted),  and  all  property 
then  existing  which  has  been  purchased  or  acquired  by 
the  company  after  June  30th,  1906,  for  use  as  a  part  of 
or  in  connection  with  the  said  system  of  street  railways, 
the  cost  of  which  shall  have  been  certified  by  the  Board 
of  Supervising  Engineers,  as  in  this  section  and  in  sec- 
tion 7  hereof  provided,  and  also  all  extensions  of  and 
additions  (including  underground  trolleys,  if  any)  to 
said  street  railways  made  under  the  provisions  of  this 


288 

ordinance,  and  all  rights  of  every  kind  under  this  ordin- 
ance in  or  to  any  subways  or  extensions  thereof  con- 
structed under  the  provisions  of  this  ordinance. 

PEICE  TE  BE  PAID  BY  THE  CITY. 

In  case  the  said  city  shall  purchase  and  take  over  the 
street  railway  system  of  the  company,  as  in  this  ordin- 
ance provided,  then  it  shall  pay  for  the  same  the  aggre- 
gate of  the  following  items : 

1.  The  value  of  the  property  described  in  the  said  ap- 
praisal inventory  and  the  value  of  all  the  franchises, 
rights  and  claims  of  every  description,  to  construct,  main- 
tain or  operate  street  railways  in  the  said  city  now  be- 
longing to  the  company,  or  claimed  by  it,  which  said 
value  of  such  property  and  all  of  said  franchises,  rights 
and  claims  is  hereby  fixed  (for  the  purpose  of  such 
purchase)  at  the  sum  of  twenty-one  million  dollars  ($21,- 
000,000). 

2.  The  value  of  any  and  all  property  and  equipment 
and  additions  thereto  supplied,  purchased  or  acquired  by 
said  company  as  a  part  of  its  street  railway  system,  be- 
tween the  30th  day  of  June,  A.  D.  1906,  and  February 
1st,  A.  D.  1907,  including  any  equipment  and  additions 
thereto  which  were  in  process  on  June  30th,  1906,  of 
being  so  supplied,  purchased  or  acquired,  but  excluding 
any  property  described  in  the  aforesaid  inventory,  and 
repairs  to  and  maintenance  thereof  and  any  expenditures 
in  connection  therewith  properly  chargeable  to  operating 
expenses.  From  such  value  shall  be  deducted  the  value 
of  any  property  included  in  said  inventory  w'hich  shall 
have  been  lost,  destroyed  or  impaired  (ordinary  wear  ex- 
cepted) after  the  30th  day  of  June,  A.  D.  1906,  and 
prior  to  the  1st  day  of  February,  A.  D.  1907.  The  value 
to  be  allowed  under  this  paragraph  Number  2  of  this  sec- 


289 

tion  shall  be  determined  by  the  Board  of  Supervising 
Engineers  immediately  after  the  assumption  by  said 
board  of  their  duties  in  supervising  the  work  of  recon- 
struction and  re-equipment  in  this  ordinance  provided 
for,  and  shall  be  reported  by  said  board  to  the  city  con- 
troller of  said  city;  and  the  amount  so  reported  by  said 
board  shall  be  final  and  binding  upon  the  parties  hereto 
and  shall  be  conclusively  held  and  taken  as  the  value  of 
the  property  and  equipment  in  this  paragraph  specified. 

3.  The  cost  of  reconstruction  and  re-equipment  of  said 
street  railway  lines  of  the  company  and  of  the  construc- 
tion of  new  lines,  extensions,  underground  trolleys  and 
other  additions  to  property  actually  paid  by  said  com- 
pany at  and  prior  to  said  purchase  by  said  city  and  certi- 
fied by  the  Board  of  Supervising  Engineers,  or  incurred 
for  work  actually  done  or  materials  furnished  with  the 
approval  of  said  board  under  completed  or  pending  con- 
tracts, except  those  for  which  special  provision  is  made 
in  subdivision  4  of  this  section,  together  with  the  per- 
centages thereon  as  in  section  7  hereof  provided,  and  all 
amounts  which  shall  then  have  been  contributed  by  the 
company  to  the  city  for  the  construction  of  subways  or 
extensions  thereof,  together  with  five  (5)  per  cent  of  said 
last  named  amounts  as  hereinbefore  provided. 

,4.  After  the  giving  of  the  notice  of  the  election  of  the 
said  city  to  purchase  said  street  railway  system  of  the 
company,  as  herein  provided,  and  prior  to  the  date  fixed 
for  said  purchase,  the  said  Board  of  Supervising  En- 
gineers shall  make  a  written  estimate  (and  furnish  a 
copy  thereof  to  the  said  company  and  the  said  city)' 
of  the  probable  cost  of  completing  any  work  of  construc- 
tion or  equipment  provided  for  by  this  ordinance,  includ- 
ing the  construction  of  new  lines,  extensions,  underground 


290 

trolleys  or  other  additions  to  property  and  including  any 
extensions  of  the  street  railway  system  of  said  company 
made  under  the  provisions  of  section  36  hereof,  which 
work  has,  and  to  the  extent  to  which  it  has,  prior  to  the 
date  of  giving  said  notice,  been  contracted  for  by  the  said 
company,  with  the  approval  of  said  Board  of  Supervising 
Engineers,  and  the  city  shall  either  take  over  and  as- 
sume said  contracts  and  procure  the  release  of  the  com- 
pany from  all  obligation  thereunder,  or  the  said  city 
shall,  at  or  prior  to  the  date  of  the  said  purchase  of  the 
street  railway  system  of  said  company,  deposit  with  a 
depositary  or  depositaries  (authorized  to  act  as  such  by 
this  ordinance)  a  sufficient  amount  of  money  to  pay  the 
cost  of  completing  such  contracts  according  to  the  said 
estimate  of  the  said  Board  of  Supervising  Engineers,  and 
the  said  company  shall  proceed,  with  all  due  diligence 
and  care,  to  complete  said  contracts  at  its  own  expense 
and  under  the  supervision  of  said  Board  of  Supersiving 
Engineers,  and  the  cost  of  completing  the  said  contracts 
after  the  date  of  such  purchase  by  the  city,  together  with 
the  said  additional  percentages  thereof,  shall  be  paid 
from  time  to  time  by  the  said  depositary  or  depositaries 
out  of  the  funds  so  deposited,  upon  the  written  certificates 
of  the  said  Board  of  Supervising  Engineers.  In  the 
event  that  the  said  amount  so  deposited  shall  not  be  suffi- 
cient to  pay  the  said  cost,  including  said  additional  per- 
centages provided  for  in  Section  7  hereof,  the  said  city 
shall  pay  such  additional  amount  as  may  be  necessary 
for  such  purpose,  and  in  the  event  that  the  amount 
so  deposited  shall  be,  more  than  sufficient  to  pay  the  said 
cost,  the  unexpended  balance  shall  be  returned  and  paid 
over  to  the  city  by  the  said  depositary  or  depositaries 
holding  the  same,  and  in  no  event  shall  the  company  be 
obligated  to  incur  a  greater  expense  in  carrying  out  said 
contract  than  the  amount  so  deposited. 


291 

PAYMENT  OE  DEPOSIT  OF  PURCHASE  PRICE. 

Upon  the  deposit  of  the  sum,  if  any,  required  by  the 
above  and  foregoing  paragraph  numbered  4  of  this  sec- 
tion and  the  payment  in  cash  of  the  amounts  hereinbe- 
fore in  paragraphs  numbered  1,  2  and  3  of  this  section 
provided  for,  to  the  company,  or  the  deposit  of  said 
amounts  to  the  order  of  the  company  with  one  or  more 
of  the  depositaries  authorized  to  act  as  such  by  this  or- 
dinance the  said  city  shall  have  full  right  and  lawful 
authority,  after  the  notice  and  upon  any  of  the  dates 
hereinbefore  fixed,  to  take  over  and  possess,  as  its  own 
property,  all  the  property,  plant  and  equipment  of  every 
sort  and  nature  (including  underground  trolleys),  then 
constituting  the  street  railway  system  of  the  company, 
and  all  rights  of  every  kind  under  this  ordinance  in  or  to 
any  subways  or  extensions  thereof  constructed  under 
the  provisions  of  this  ordinance,  free  and  clear  of  all 
liens  and  claims  of  every  nature,  except  that  the  said 
city  shall  take  subject  to  the  payment  of  a  fractional 
part  of  the  unpaid  taxes  for  the  current  year  upon  the 
said  property,  rights  and  equipment,  equal  to  the  frac- 
tional part  of  the  year  for  which  such  taxes  have  been 
levied  or  assessed  remaining  unexpired  at  the  date  of 
such  purchase,  and  the  balance  of  the  taxes  shall  be 
treated  and  paid  as  a  part  of  the  operating  expenses  prior 
to  the  sale  of  the  property. 

The  company  further  grants  to  the  said  city,  and  the 
said  city  hereby  reserves  to  itself,  the  right  (in  addition 
to  the  right  of  purchase  hereinbefore  granted  and  re- 
served) to  purchase  and  take  over  from  the  company  at 
any  time  prior  to  February  first,  1927,  the  street  railway 
system,  rights  and  property  of  the  company,  free  from 
any  limitation  and  restriction  as  to  the  operation  thereof, 
at  the  same  times  and  in  the  same  manner  at  and  upon 


292 

which  the  city  has  the  right  under  the  foregoing  provi- 
sions of  this  section  to  purchase  the  same.  The  price  to 
be  paid  therefor  by  the  city  under  the  right  of  purchase 
in  this  paragraph  granted  and  reserved  shall  be  the  price 
at  which  the  city  shall  then  have  the  right  to  purchase 
said  property  for  municipal  operation  as  hereinbefore 
specified,  and  in  addition  to  such  price  a  sum  equal  to 
twenty  (20)  per  cent  of  such  price. 

The  property  to  the  possession  of  which  the  said  city 
shall  then  be  entitled  shall  include  all  of  the  property 
then  existing  which  constitutes  the  street  railway  system 
of  the  company  and  its  appurtenances  at  the  date  of  the 
passage  of  this  ordinance  (excepting  property  enumer- 
ated in  said  Exhibit  D)  and  all  of  the  property  purchased 
or  acquired  thereafter  by  the  company,  and  all  extensions 
of,  or  additions  to,  said  street  railways,  including  under- 
ground trolleys  constructed  under  the  provisions  of  this 
ordinance,  and  all  rights  of  the  said  company  in  or  to 
any  subways  or  extensions  thereof  constructed  under  this 
ordinance,  and  the  sum  then  on  deposit  as  a  reserve  fund, 
under  the  provisions  of  section  16  of  this  ordinance,  ex- 
cepting such  property  as  may  have  been  sold  as  in  this 
ordinance  authorized,  or  worn  out  or  destroyed,  provided 
that  in  case  of  property  destroyed  and  not  then  replaced 
in  kind  or  in  value  as  provided  in  section  17  of  this  or- 
dinance, adjustment  shall  forthwith  be  made  at  the  time 
of  such  purchase  and  the  obligation  of  the  company  in 
that  behalf  discharged  either  in  cash  or  by  deduction  from 
the  purchase  price. 

In  the  event  that  it  shall  be  determined  that  the  city 
is,  at  the  time  this  ordinance  is  passed  or  at  the  time 
this  ordinance  takes  effect,  without  lawful  power  or 
authority  to  acquire  or  own  street  railways  under  the 
provisions  of  this  ordinance  or  otherwise,  and  the  city 


293 

shall  thereafter  acquire  such  power  or  authority,  there- 
upon and  after  such  acquirement  the  city  shall  have  the 
right  to  purchase  and  acquire  said  street  railways,  rights 
and  property  under  the  provisions  of  this  ordinance  to 
the  same  extent  and  in  the  same  measure  as  if  said  city 
had  full  right  and  lawful  authority  so  to  purchase  or 
acquire  said  street  railways,  rights  and  property  at  the 
date  of  the  passage  of  this  ordinance  and  at  the  date 
when  this  ordinance  takes  effect. 

CITY  PURCHASE  DURING  RECONSTRUCTION  PERIOD. 

Sec.  21.  In  the  event  that  the  said  city  shall  elect  to 
exercise  its  right  of  purchase,  as  in  this  ordinance  pro- 
vided, at  any  time  prior  to  the  completion  of  the  work 
of  construction,  reconstruction,  equipment  and  re-equip- 
ment within  the  time  and  in  the  manner  provided  for  in 
said  Exhibit  B,  under  the  head  of  "Immediate  Rehabilita- 
tion" it  shall  take  over  the  same  subject  to  the  right  and 
obligation  of  the  company  to  complete  the  said  work  of 
"Immediate  Rehabilitation"  as  provided  in  this  ordin- 
ance, carrying  out  the  terms  and  conditions  of  said  Ex- 
hibit B  under  the  supervision  and  control  of  the  said 
Board  of  Supervising  Engineers  and  receiving  therefor 
the  cost  thereof  and  the  additional  percentages  thereon 
as  in  section  7  of  this  ordinance  provided. 

In  such  event  in  addition  to  complying  with  tlie  pro- 
visions of  section  20  hereof  the  said  city  shall  deposit  at 
the  time  of  such  purchase  with  some  one  or  more  of  the 
banks  or  trust  companies  authorized  to  act  as  deposi- 
taries under  the  terms  of  this  ordinance  a  sufficient 
amount  of  money  to  pay  for  the  completion  of  the  said 
work  of  "Immediate  Rehabilitation,"  not  herein  other- 
wise provided  for,  which  said  amount  shall  be  estimated 
and  determined  by  the  said  Board  of  Supervising  En- 


294 

gineers,  and  shall  include  said  additional  percentages  pro- 
vided for  in  section  7  hereof. 

The  said  cost  of  completing  the  said  work  of  "Imme- 
diate Kehabilitation,"  together  with  said  additional  per- 
centages thereof  shall  be  paid  from  time  to  time  by  the 
said  depositary  or  depositaries,  out  of  the  funds  so  de- 
posited with  it  or  them,  upon  the  written  certificates  of 
the  said  Board  of  Supervising  Engineers. 

In  the  event  that  the  said  amount  so  deposited  shall 
not  be  sufficient  to  pay  the  said  cost,  including  said  addi- 
tional percentages  provided  for  in  section  7  hereof,  the 
said  city  shall  pay  such  additional  amount  as  may  be 
necessary  for  such  purpose. 

In  the  event  that  the  amount  so  deposited  shall  be 
more  than  sufficient  to  pay  the  said  cost,  the  unexpended 
balance  shall  be  returned  and  paid  over  to  the  said  city 
by  the  said  depositary  or  depositaries,  and  in  no  event 
shall  the  company  be  obligated  to  incur  a  greater  expense 
for  the  work  of  such  construction,  reconstruction,  equip- 
ment and  re-equipment,  including  underground  trolleys 
and  other  additions  to  plant  and  property,  if  any,  than 
the  amount  so  deposited. 

RIGHT  OF  LICENSEE  TO  PURCHASE. 

Sec.  22.  The  company  by  the  acceptance  of  this  ordi- 
nance shall  and  does  grant  to  the  city,  and  the  city  hereby 
reserves  to  itself,  the  right  to  designate  any  pereon,  firm 
or  corporation  having  lawful  authority  to  acquire,  own 
and  operate  street  railways  in  said  city  (herein  called  the 
"licensee")  who  or  which  shall  have  the  right  to  purchase 
the  street  railway  system,  rights  and  property  of  the  com- 
pany, at  the  same  times  and  in  the  same  manner  at  and 
upon  which  the  city  hereunder  has  the  right  to  purchase 
the  same,  subject  to  the  condition  that  the  said  licensee 
shall  purchase  the  same  property  which  the  city  has  here- 


295 

in  reserved  the  right  to  purchase,  and  that  tlje  price  to  be 
paid  therefor  by  the  said  licensee  shall  be  the  price  at 
which  the  city  shall  have  the  right  to  purchase  said  prop- 
erty for  municipal  operation,  and  in  addition  to  such  price 
a  sum  equal  to  twenty  (20)  per  cent  of  such  price;  but  it 
is  expressly  provided,  however,  that  the  said  licensee  shall 
not  be  required  to  pay  the  said  additionaJ  twenty  (20) 
per  cent  or  any  part  thereof,  if,  before  the  purchase  of 
said  property  by  such  licensee  shall  be  consummated,  a 
valid  and  binding  contract  shall  be  entered  into  between 
the  city  and  its  licensee,  either  by  the  passage  of  an  ordi- 
nance and  the  acceptance  thereof  or  otherwise,  which 
shall  limit  the  beneficial  interest  of  the  said  licensee  (and 
its  stokholders,  if  such  licensee  is  a  corporation)  in  the 
property  purchased  and  any  improvements  thereof  or 
additions  thereto  to  a  return  of  the  actual  moneys  in- 
vested therein  by  said  licensee  and  not  exceeding  five 
(5)  per  cent  thereof,  in  addition  thereto,  and  interest 
upon  the  said  moneys  and  the  said  additional  per  cent  at 
a  rate  not  exceeding  five  (5)  per  cent  per  annum,  and 
which  shall  provide  that  all  net  profits  derived  from  the 
said  property  in  excess  of  the  beneficial  interest  of  said 
licensee,  limited  as  aforesaid,  shall  belong  and  be  paid 
over   to   the   city. 

Nothing  in  this  ordinance,  however,  shall  have  the  effect 
or  be  construed  to  have  the  effect  of  lessening  or  limiting 
the  right  of  the  city  to  provide  for  reducing  the  rates  of 
fare  to  be  chaxged  by  such  licensee  in  the  operation  of 
said  street  railway  system  or  from  using  the  moneys  so  to 
be  paid  over  to  the  said  city  by  said  licensee  for  the  pur- 
pose of  retiring  from  time  to  time  the  stock  or  other  se- 
curities issued  by  said  licensee,  subject  to  the  limitations 
of  this  section,  or  from  using  the  said  moneys  in  extend- 
ing or  adding  to  or  improving  said  street  railwaj-  system. 

The  right  of  the  licensee  of  the  city  to  acquire  the  said 


296 

street  railway  system  rights  and  property  by  purchase 
under  the  provisions  of  this  ordinance  shall  in  no  way 
be  impaired  by  any  lack  of  power  or  authority  on  the  part 
of  the  city  itself  to  acquire  the  said  street  railway  system, 
rights  and  property  for  municipal  use  and  operation  or 
otherwise. 

Upon  the  purchase  of  the  said  street  railway  syst-em, 
rights  and  property  under  the  provisions  of  this  ordinance, 
either  by  the  city  or  by  any  licensee  of  the  city,  all  rights, 
of  the  company,  its  licensees  or  assigns  under  this  ordi- 
nance in  or  to  said  street  railways,  rights  and  property 
or  any  part  thereof,  or  the  operation  thereof,  or  receipts 
thereof,  shall  wholly  cease  and  determine. 

EIGHTS  OF  COMPANY  IN  CASE  CITY  DOES  NOT  PURCHASE  FOR 
TWENTY  YEARS. 

Sec.  23.  In  the  event  that  the  said  street  railways  are 
not  purchased  by  the  said  city  or  its  licensee  as  herein- 
ahove  authorized,  prior  to  February  jftrst,  A.  D.  1927  (and 
nothing  in  this  ordinance  contained  shall  be  construed  as 
being  in  any  event  a  grant  to  the  company  extending 
beyond  February  first,  1927),  the  said  city  shall  have  the 
right  to  designate  any  person,  firm  or  corporation  having 
lawful  authority  to  acquire,  own  and  operate  street  rail- 
ways in  said  city  as  its  licensee,  to  purchase  the  said 
street  railways,  property  and  rights  of  the  company  at  or 
after  February  first,  1927,  upon  the  same  terms  that  the 
city  could  then  purchase,  and  in  case  such  reserved  right 
of  purchase  be  not  exercised  by  the  said  city  or  its  licensee 
and  the  city  shall  grant  a  right  to  another  company  to 
operate  a  street  railway  in  the  streets  and  parts  of  streets 
constituting  the  said  street  railway  system  of  the  com- 
pany, such  new  company  shall  be  required  to  and  shall 
purchase  and  take  over  the  said  street  railways,  property 
and  rights  of  the  company  at  or  after  February  first, 


297 

1927,  upon  the  same  terms  upon  which  the  said  city  might 
then  purchase  and  take  them  over. 

No  mortgage,  trust  deed  or  other  instrument  given  by 
the  company  shall  impose  any  lien  upon  or  create  any 
rights  in  the  said  street  railways,  property  and  rights, 
without  the  same  being  made  specifically  subject  to  all  the 
limitations,  conditions  and  provisions  of  this  ordinance, 
including  the  right  of  the  said  city  or  its  licensee  to  ac- 
quire the  said  property  and  rights  upon  the  terms  and  in 
the  manner  in  this  ordinance  provided,  and  in  the  event 
of  such  purchase  the  lien  of  any  such  mortgage,  trusrt 
deed  or  other  encumbrance,  and  all  other  liens  ux)on  said 
street  railways,  property  and  rights,  or  any  part  thereof, 
shall  be  discharged  from  said  street  railways,  property 
and  rights  and  shall  attach  to  the  proceeds  of  the  sale 
thereof. 

INTEREST  EETUEN   OP  CAPITAL  INVESTMENT. 

Sfec.  24.  On  or  before  the  tenth  day  of  April  in  each 
year  the  company  shall  come  to  an  accounting  and  settle- 
ment with  the  said  city  as  of  the  thirty-first  day  of  Janu- 
ary last  preceding,  upon  the  following  basis: 

From  the  gross  receipts  of  the  said  street  railway  sys- 
tem and  property  from  all  sources  and  of  evevj  kind  for 
the  year  ending  on  said  thirty-first  day  of  January  there 
shall  be  deducted  for  such  year: 

First:  (1)  All  expenses  of  operation,  including  main- 
tenance, repairs  and  renewals;  (2)  All  amounts  contrib- 
uted during  said  year  and  then  held  in  reserve  under  the 
provisions  of  Sections  16  and  18  hereof;  (3)  All  amounts 
paid  out  for  taxes  and  assessments  levied  and  imposed 
upon  the  real  and  personal  property  of  the  company,  in- 
cluding all  capital  stock  or  franchise  taxes  levied  or  as- 
sessed after  the  31st  day  of  January,  1907,  but  not  includ- 
ing any  taxes  which  may  by  any  court  be  ordered  to  be 
levied,  assessed  or  collected  after  the  31st  day  of  January, 


298 

1907,  on  account  of  the  failure  of  the  company  or  any  per- 
son, firm  or  corporation  owning  or  having  an  interest  in 
the  said  street  railways  or  propei'ty,  to  pay  any  taxes 
which  should  have  been  paid  for  or  on  account  of  such 
street  railw^ays  or  property  prior  to  the  31st  day  of  Janu- 
ary, 1907,  and  not  including  any  sums  paid  by  the  com- 
pany to  the  city  for  city  license  fees,  if  any,  exacted  from 
the  company  or  its  employes;  (4)  All  salaries  and  ex- 
penses of  the  Board  of  Supervising  Engineers  by  this  ordi- 
nance authorized,  after  the  period  of  "Immediate  Rehab- 
ilitation"; and 

Second:  A  sum  equivalent  to  five  (5)  i>er  centum  per 
annum  for  said  preceding  year  upon  the  amount  of  the 
cash  purchase  price  which  the  said  city  would  then  be 
obligated  to  pay  on  account  of  the  items  specified  in  sub- 
divisions 1,  2  and  3  of  Section  20  hereof,  if  it  were  pur- 
chasing the  property  for  municipal  operation  on  such 
thirty-first  day  of  January,  interest  being  adjusted  as  to 
items  added  to  such  purchase  price  during  said  year.  In 
case  in  any  year  the  gross  receipts  shall  not  be  suflBcient 
to  pay  in  full  the  items  in  the  "first"  and  "second"  i)ara- 
graphs  of  this  section  mentioned,  then  the  deficit  shall  be 
paid  out  of  the  gross  receipts  of  the  subsequent  year  or 
years. 

DIVISION  OF  REMAINING  NET  RECEIPTS. 

After  the  deduction  from  the  gross  receipts  of  the  items 
hereinbefore  in  this  section  provided,  the  amount  remain- 
ing shall  be  considered  as  the  net  receipts  for  such  year 
arising  from  the  operation  of  the  street  railway  system 
hereby  authorized,  and  shall  be  divided  between  the  com- 
pany and  the  said  city  in  the  following  proportions :  forty- 
five  (45)  per  cent  to  be  retained  by  the  company,  and 
fifty-five  (55)  i>er  cent  to  be  paid  forthwith  by  the  com- 
pany to  the  said  city,  crediting  thereon  all  amounts  paid 
out  during  the  preceding  year  by  the  company  for  city 


299 

license  fees,  if  any,  exacted  from  the  company  or  its  em- 
ployes. 

COMMUTATION  OF  FAEES. 

It  is  understood  and  agreed  that  the  company's  agree- 
ment and  obligation  to  pay  to  the  city  the  fifty-five  (55) 
per  cent  of  the  "net  receipts,"  as  hereinbefore  provided  is 
based  upon  its  right  to  charge  and  receive  the  fares  pre- 
scribed in  Section  11  hereof  and  to  retain  as  its  own 
the  forty^flve  (45)  per  cent  of  the  "net  receipts"  as  is 
hereinabove  in  this  section  provided.  The  said  city,  how- 
ever, reserves  the  right  to,  and  it  may  at  any  time  com- 
mute a  sum  not  exceeding  the  city's  share  of  the  net  re- 
ceipts for  the  previous  year  into  a  reduction  of  said  rates 
of  fare;  and  thereafter  in  the  event  of  such  reduction  of 
rates  of  fare  the  company  may  deduct  and  retain  as  its 
share  of  the  net  receipts  each  year  an  amount  equal  to 
what  would  have  been  the  company's  share  of  the  net  re- 
ceipts of  such  year  had  the  passengers  earned  during  such 
year  paid  the  fares  pi*escribed  in  this  ordinance,  but  the 
company,  after  deducting  and  retaining  its  share  of  said 
net  receipts  so  determined  shall  pay  over  to  the  said  city 
the  remainder,  if  any,  of  the  net  receipts  for  such  year 
less  the  deductions  therefrom  hereinbefore  provided  to  be 
made  from  the  said  city's  share  of  the  "net  receipts"  on 
account  of  license  fees. 

CITY  TO  ESTABLISH  SINKING  FUND  FOR  MUNICIPAL 
PURCHASE. 

It  is  further  provided  that,  subject  to  the  action  of  the 
Oity  Council  of  said  city,  the  said  city  shall  deposit  the 
amount  so  paid  to  the  said  city  to  the  credit  of  a  separate 
fund  to  be  kept  and  used  for  the  purchase  and  construc- 
tion of  street  railways  by  said  city;  but  any  failure  to 
comply  with  this  provision  shall  in  no  way  affect  the 
rights  or  obligations  of  the  company  under  this  ordinance. 


300 

CAPITAL  INVESTMENT  LIMITATION. 

Sec.  25.  The  company  shall  not  he  required  on  account 
of  any  extensions  of  subways  or  on  account  of  under- 
ground trolleys,  or  on  account  of  any  extensions  of  its 
street  railways,  other  than  the  extensions  provided  for  in 
Exhibit  A,  and  in  Section  36  of  this  ordinance,  and  four 
(4)  miles  of  double  or  eight  (8)  miles  of  single  track  per 
annum,  as  in  Section  3  hereof  provided,  to  increase  its 
total  capital  investment  to  such  an  extent  that  the  return 
thereon  over  and  above  the  interest  charge  of  five  per  cent 
thereon  by  this  ordinance  authorized,  would  be  reduced  to 
an  inadequate  or  unreasonably  small  amount. 

DEPOSITAEIES. 

Sec.  26.  Any  state  or  national  bank  or  trust  company 
in  the  city  of  Chicago  or  in  the  city  of  New  York  which 
has  a  capital  stock  and  surplus  amounting  to  at  least  one 
million  dollars  (11,000,000)  may  be  selected  and  can  act 
as  a  depositary  under  the  provisions  of  this  ordinance, 
provided,  that  no  moneys  shall  be  deposited  with  any 
such  dei)Ositary  under  the  provisions  of  this  ordinance  to 
an  amount  exceeding  the  total  capital  stock  and  one-half 
of  the  surplus  of  such  depositary;  and  provided  further 
that  all  deposits  authorized  or  required  by  this  ordinance 
(except  deposits  of  purchase  money  in  the  event  of  pur- 
chase of  said  street  railway  system  by  the  city,  or  its 
licensee)  shall  be  made  with  depositaries  in  the  city  of 
Chicago. 

DEPOSITS. 

Sec.  27.  The  comi>any  shall  have  the  right  to  select 
the  particular  depositary  or  depositaries  with  which  it 
shall  deposit  any  of  the  funds  required  to  be  deposited  by 
the  company  under  the  provisions  of  this  ordinance,  and 
the  company  shall  at  all  times  be  held  responsible  for  any 
loss  or  impairment  of  any  such  deposit,  and  shall  prompt- 
ly make  good  and  restore  at  its  own  cost,  and  not  out  of 


301 

the  receipts  of  said  street  railways,  any  such  loss  or  im- 
pairment. The  city  or  its  licensee,  as  the  case  may  be, 
shall  have  the  right  to  select  the  particular  depositary  or 
dejwsitaries  with  which  shall  be  deposited  the  funds  re- 
quired to  be  dei)Osited  by  the  city  or  its  licensee,  in  the 
event  of  purchase  of  the  said  street  railways  by  the  city 
or  its  licensee  under  the  provisions  of  this  ordinance,  and 
the  city  or  its  licensee,  as  the  case  may  be,  shall  at  all 
times  be  held  responsible  for  any  loss  or  impairment  of 
any  such  deposit  made  by  it,  and  shall  promptly  make 
good  and  restore  any  such  loss  or  impairment. 

Provided,  that  in  all  cases  where,  under  the  terms  of 
this  ordinance,  the  city  is  authorized  or  required  to  make 
any  deposits  of  money,  the  city  shall  be  free  from  any 
responsibility  for  loss  or  impairment  of  any  such  deposit, 
if  not  less  than  thirty  days  prior  to  the  making  of  such 
deposit  it  shall  give  notice  in  writing  to  the  company  of 
the  names  of  the  depositaries  in  which  it  shall  propose  to 
make  such  deposit.  And  the  company,  if  not  satisfied 
therewith,  shall  give  notice  in  writing  to  the  city  not  less 
than  twenty  days  after  receiving  such  notice  from  the 
city.  The  notice  of  the  company  may  direct  the  city  not 
to  make  such  deposit,  or  any  specified  portion  of  it,  with 
any  depositary  or  depositaries  so  named  by  the  city  of 
which  the  company  may  disapprove,  and  in  such  case 
such  notice  by  the  company  shall  contain  the  names  of 
qualified  depositaries  from  which  the  city  may  choose  in 
lieu  of  the  names  so  disapproved  of  by  the  company,  and 
the  number  of  the  names  of  depositaries  in  such  notice 
by  the  company,  from  which  the  city  is  to  choose,  shall 
be  at  least  five  in  excess  of  the  number  of  depositaries 
which  the  company  shall  disapprove  of  as  stated  in  such 
notice.  And  the  city,  upon  making  deposits,  in  accord- 
ance with  the  terms  of  this  proviso,  shall  be  free  from  any 
responsibility  for  loss  or  impairment  of  any  such  deposits. 


302 

INTEREST  ON  DEPOSITS. 

Sec.  28.  Appropriate  proyision  for  the  payment  of 
reasonable  interest  on  any  funds  deposited  under  tlie  pro- 
visions of  this  ordinance  shall  be  made  with  the  deposi- 
tary or  depositaries  of  such  funds  by  the  party  making 
such  deposit.  All  interest  which  may  accrue  upon  or  be 
payable  on  account  of  any  funds  deposited  under  the  pro- 
risions  of  this  ordinance  and  any  commission  or  allow- 
ance made  directly  or  indirectly  by  any  depositary  on 
account  of  the  funds  deposited  with  it  shall  be  held  and 
considered  as  a  part  of  the  principal  fund  so  dex>osited 
and  shall  be  added  to  such  fund  as  a  part  thereof. 

The  company  shall  make  daily  deposits,  with  some  de- 
positary or  depositaries  authorized  by  this  ordinance,  of 
all  moneys  received  by  the  company  from  the  operation 
of  the  said  street  railways  and  property,  and  shall  make 
appropriate  provision  for  the  payment  of  reasonable  in- 
terest on  the  moneys  so  deposited  by  such  depositary  or 
depositaries,  which  interest  shall  be  added  to  and  be  held 
and  considered  as  a  part  of  the  gross  receipts  of  the  said 
street  railway  system  and  property. 

ANNUAL   EEPOETS. 

Sec;  29.  The  company,  so  long  as  it  continues  to  oper- 
ate any  of  the  said  street  railways  under  this  ordinance, 
and  on  or  before  the  tenth  day  of  April  in  each  year  shall 
prepare  and  file  with  the  city  comptroller  of  said  city 
annual  reports  for  the  preceding  year  ending  on  the  31st 
day  of  January. 

Such  reports  shall  be  in  writing,  verified  by  the  aflB- 
davit  of  the  auditor  of  the  company,  setting  forth  in  rea- 
sonable detail  according  to  forms  prescribed  by  said  comp- 
troller, the  character  and  amount  of  business  done  by  the 
company  for  the  year  immediately  preceding  such  report 
and  the  amount  of  receipts  from  and  the  expenses  of  con- 
ducting the  said  business,  and  the  said  city  comptroller, 


303 

or  accountants  authorized  by  him,  under  the  direction  of 
the  mayor  or  city  council  of  said  city,  shall  have  the 
right  at  all  reasonable  times  to  examine  all  the  books, 
vouchers  and  records  of  the  receipts  and  expenditures  of 
the  company,  for  the  purpose  of  ascertaining  the  accuracy 
of  the  reports  herein  required  and  the  rights  of  the  said 
city  under  this  ordinance.  The  Board  of  Supervising 
Engineers  shall  have  the  power  to  prescribe  the  form  and 
manner  in  which  the  books  and  accounts  of  the  company 
shall  be  kept  subject  to  the  approval  of  the  city  comp- 
troller. There  shall  be  also  an  annual  audit  of  the  ac- 
counts of  the  company  covering  all  receipts  and  expendi- 
tures for  the  year  ending  on  the  thirty-first  day  of  Jan- 
uary next  preceding,  and  a  formal  \\Titten  report  by  pub- 
lic accountants  selected  by  the  city  and  the  company,  the 
expenses  of  such  audit  and  report  to  be  paid  out  of  the 
gross  receipts  of  the  company  as  an  operating  expense. 

In  the  event  of  any  purchase  of  the  street  railways  and 
property  of  the  company  under  the  provisions  of  this  ordi- 
nance, on  the  first,  day  of  August  of  any  year,  there  shall 
be  an  accounting  and  report  for  the  preceding  six  months 
similar  in  character  to  that  hereinbefore  provided. 

COMPANY  TO  MAINTAIN  OFFICE  IN  CITY. 

Sec.  30.  The  company  shall  not  remove  its  principal 
office  or  any  of  its  books  (except  bond  registry  and  stock 
transfer  books),  records,  accounts,  contracts,  or  original 
vouchers  of  receipts  and  expenditures  beyond  the  limits 
of  the  said  city,  and  shall  maintain  an  office  within  said 
city  so  long  as  the  company  continues  to  operate  any  part 
of  the  street  railways  mentioned  and  provided  for  in  this 
ordinance  under  the  provisions  hereof. 

FORFEITURE   FOR    NON-COMPLIANCE. 

Sec.  31.  The  company,  by  the  acceptance  of  this  ordi- 
nance, expressly  agrees  with  the  said  city  and  obligates 


304 

itself  fullj  to  eomplj  TN'itli  all  of  the  terms  and  conditions 
of  this  ordinance  throughout  the  period  of  time  covered 
hereby,  and  so  long  as  the  company  continues  to  operate 
any  street  railways  in  said  city  under  or  by  virtue  of  the 
authority  hereof. 

The  company  further  agrees  that  in  the  event  that  it 
sihall  make  default  in  the  O'bservance  or  x>erformance  of 
any  of  the  agreements  or  conditions  herein  required  to  be 
kept  and  performed  by  it,  and  if  any  such  default  shall 
continue  for  a  period  of  three  (3)  months  (exclusive  of 
all  times  during  which,  the  company  may  be  delayed  or 
interfered  with,  without  its  connivance,  by  unavoidable 
accidents,  labor  strikes  or  the  orders  or  judgments  of 
any  court  entered  in  any  suit  brought  without  its  con- 
nivance), after  written  notice  thereof  to  it  from  the  said 
city,  then  and  in  each  and  every  siadh  case,  the  said  city 
by  its  city  council  shall  be  entitled  to  declare  this  grant 
and  all  of  the  rights  and  privileges  of  the  company  to 
maintain  and  operate  street  railways  in  any  of  the  streets 
or  public  ways  of  the  said  city  to  be  forfeited  and  at  an 
end;  provided,  however,  that  should  the  company,  for  its 
corporate  purposes,  pledge  or  mortgage  its  street  railway 
property  or  any  of  the  rights  secured  to  it  by  this  ordi- 
nance, or  any  security  representing  the  said  proi)erty  or 
rights,  for  the  security  of  the  payment  of  its  notes,  bonds 
or  other  evidences  of  indebtedness  maturing  on  or  before 
February  first,  1927,  the  amount  thereof  not  being  in  ex- 
cess of  the  value  of  the  property  and  rights  of  the  com- 
pany, as  defined  in  Section  20  hereof,  such  right  of  for- 
feiture of  this  grant  by  reason  of  any  violation  by  the 
company  of  the  provisions  of  this  ordinance  shall  not  be 
asserted  or  exist  against  such  pledgee  or  pledgees,  mort- 
gagee or  mortgagees,  or  any  of  them,  and  shall  not  impair 
or  affect  the  right  of  such  pledgee  or  pledgees,  mortgagee 


305 

or  mortgagees,  to  recover  by  foreclosure  or  other  legal 
process  against  all  the  property  of  the  company,  includ- 
ing the  rights  and  privileges  hereby  granted,  the  face 
value  of  said  notes,  bonds  or  other  evidences  of  indebted- 
ness, or  any  security  representing  the  said  property  or 
rights  to  an  amount,  however,  not  in  excess  of  the  sum 
for  which  the  city  would  then  have  the  right  under  the 
terms  of  this  ordinance  to  purchase  the  said  street  rail- 
way property;  and  it  is  hereby  stipulated  that  any  notice 
of  default  by  the  company,  upon  which  a  forfeiture  shall 
be  claimed,  shall  also  be  given  by  the  said  city  to  the  trus- 
tee or  mortgagee  of  record  in  any  trust  deed  or  mortgage 
securing  such  indebtedness.  The  purchaser  at  any  fore- 
closure or  other  sale  shall  acquire  no  other  or  greater 
rights  or  privileges  than  are  hereby  conferred,  and  such 
purchaser  shall  hold  said  property,  so  purchased  at  such 
foreclosure  or  other  sale,  subject  to  the  right  of  purchase 
at  any  time  thereafter,  as  herein  provided,  by  the  said 
city,  and  also  subject  to  the  right  of  purchase  by  any 
licensee  of  the  said  city,  upon  the  same  terms  as  the  said 
city  might  purchase  and  acquire  said  property  for  munici- 
pal  operation,  but  without  payment  in  either  case  of  the 
additional  twenty  (20)  per  cent  provided  for  in  sections 
20  and  22  of  this  ordinance;  and  also  subject  to  the  con- 
tinuing terms,  conditions  and  limitations  of  this  ordi- 
nance, including  the  forfeiture  provisions  to  the  same 
extent  as  if  the  said  purchaser  had  been  the  original 
grantee  hereunder,  except  that  such  purchaser  shall  have 
no  right  to  execute  or  deliver  any  mortgage,  tiiist  deed 
or  other  encumbrance  on  said  street  railways,  rights  and 
property  or  any  part  thereof  without  the  content  of  said 
city. 

The  city  shall  have  the  right  to  bid  and  become  the 
purchaser  at  any  such  foreclosure  or  other  sale. 


306 

The  said  company  further  expressly  agrees  that,  by 
the  acceptance  by  it  of  this  ordinance,  it  is  obligated  to 
complete  the  said  work  of  "Immediate  Rehabilitation" 
provided  for  in  said  "Exhibit  B"  within  the  time  and  in 
the  manner  set  forth  in  said  exhibit  (due  allowance  being 
made  for  any  and  all  delays  or  interruptions  arising  with- 
out its  connivance  by  unavoidable  accidents,  labor  strikes, 
or  the  orders  or  judgments  of  any  court,  entered  in  any 
suit  brought  without  its  connivance),  and  if  the  company 
shall  fail  or  neglect  to  proceed  with  the  said  work  of 
"Immediate  rehabilitation"  with  all  reasonable  diligence 
and  promptness  after  the  acceptance  of  this  ordinance  by 
the  company,  or  to  complete  the  said  work  within  the 
time  prescribed  in  said  Exhibit  B,  and  said  Board  of 
Supervising  Engineers  shall  certify  to  the  City  Council 
of  the  said  city  that  the  company  has  failed  or  neglected 
to  so  proceed  with  said  work,  or  has  failed  or  neglected 
to  complet^e  the  work  in  the  time  specified  in  Exhibit  B, 
the  company  shall  be  and  is  obligated  to  pay  to  the  said 
city  for  each  day  that  such  default  or  neglect  shall  con- 
tinue, the  sum  of  ten  thousand  dollars  as  liquidated  dam- 
ages; and  if  the  company  shall,  at  any  time  after  the  ac- 
ceptance of  this  ordinance  by  it,  fail  to  comply  with  the 
provisions  hereof  with  regard  to  the  maintenance  of  first 
class  street  railway  service  over  and  upon  its  said  lines 
of  street  railways,  the  said  city  shall  have  the  right  to  sue 
for  and  recover  in  any  court  of  com]>etent  jurisdiction  the 
sum  of  not  less  than  fifty  dollars  and  not  more  than  five 
hundred  dollars  for  each  and  every  such  failure  and  each 
and  every  day  that  such  failure  shall  continue  shall  be 
taken  and  held  to  be  a  separate  offense;  but  the  payment 
of  such  penalties  shall  not  in  any  manner  release  the  lia- 
bility of  the  company  to  incur  a  forfeiture  of  all  its  rights 
and  privileges  under  this  ordinance,  as  hereinabove  in 
this  section  provided. 


307 

WAIVKR  OF  RIGHTS. 

Sec.  32.  The  corapanv,  in  consideration  of  the  grant 
made  by  this  ordinance,  upon  the  terms  and  conditions 
herein  expressed,  agrees  to  waive,  surrender  and  release, 
and  by  the  acceptance  of  this  ordinance,  the  company  does 
waive,  smrrender  and  release  all  and  every  one  of  the 
rights  and  claims  of  the  company  of  every  kind  and  na- 
ture, in  the  streets  of  the  said  city,  other  than  the  rights 
granted  by  this  ordinance. 

city's  right  to  intervene. 

Sec.  33.  The  company  by  the  acceptance  of  this  ordi- 
nance shall  and  does  grant  to  the  said  city,  and  the  said 
city  hereby  reserves  to  itself  the  right  to  intx^rvene  in  any 
suit  or  proceeding  brought  by  any  person,  firm  or  cor- 
poration seeking  to  enjoin,  restrain  or  in  any  manner  in- 
terfere with  the  company  in  the  doing  of  any  work  called 
for  by  this  ordinance,  or  involving  the  observance  or  per- 
formance of  any  of  the  agreements  or  conditions  herein 
provided  to  be  kept  or  performed  by  the  company,  or  in 
any  suit  to  foreclose  or  enforce  any  lien,  mortgage  or 
trust  deed  against  it  and  to  move  for  a  dissolution  of  such 
injunction  or  restraining  order  in  such  suit,  and  take  any 
other  appropriate  steps  to  protect  the  rights  of  the  said 
city  in  case  it  shall  deem  action  necessary  and  appropri- 
ate to  protect  the  interests  of  the  said  city. 

BOARD  OP  supervising  ENGINEERS. 

Sec.  34.  Immediately  upon  the  acceptance  of  this  or- 
dinance by  the  company,  there  shall  be  organized  a  Board 
of  Stipervising  Engineers  in  the  manner  following: 

Within  thirty  (30)  days  after  the  acceptance  of  this 
ordinance  as  hereinafter  provided,  the  company  shall  ap- 
point an  engineer  to  represent  it  on  said  board,  and  shall 
notify  the  mayor  of  said  city,  in  writing,  of  the  name 
and  address  of  such  engineer;  and   within   thirty    (30) 


308 

days  after  such  notice  the  said  city  shall  appoint  an  engi- 
neer as  its  representative  on  said  hoard  (which  appoint- 
ment-shall be  made  by  the  mayor  of  the  said  city  and 
shall  be  subject  to  the  approval  of  the  city  council),  and 
shall  notify  the  company  in  writing  of  the  name  and  ad- 
dress of  its  said  engineer. 

Bion  J.  Arnold  is  hereby  selected  and  appointed  the 
third  member  of  the  said  board.  The  said  city  or  the 
company  may  respectively,  at  any  tame  and  from  time  to 
time,  remove  its  representative  on  ^id  board,  and  may 
also  respectively  from  time  to  time,  appoint  an  engineer 
to  represent  it  upon  said  board,  w^henever  and  as  often 
as  it  shall  fail  to  have  a  representative  upon  said  board 
from  any  cause  whatsoever.  No  such  removal  or  appoint- 
ment shall  take  effect  until  written  notice  thereof  has 
been  given  to  the  other  party  by  the  party  making  such 
removal  or  appointment. 

The  said  city  and  the  company  may,  at  any  time  and 
from  time  to  time,  remove  the  third  engineer  from  said 
board,  and  may  also  select  and  appoint  a  third  engineer 
to  be  a  member  of  said  board,  whenever  and  as  often  as  a 
vacancy  in  said  board  shall  occur  from  the  death,  resigna- 
tion, removal,  refusal  or  inability  to  act  of  the  third  engi- 
neer upon  said  board. 

In  the  event  that  any  vacancy  in  the  i>osition  of  third 
engineer  upon  said  board  shall  not  be  filled  by  the  selec- 
tion of  a  third  engineer  by  said  city  and  the  company 
within  thirty  (30)  days  after  such  vacancy  shall  arise, 
then  the  persons  then  acting  as  judges  of  the  (main) 
Appellate  Court  for  the  First  District  of  Illinois,  or  a 
majority  of  them,  may  fill  such  vacancy  on  said  board  by 
appointing  a  competent  engineer  thereto  upon  the  appli- 
cation of  said  city  or  the  company,  after  ten  days'  writ- 
ten notice  having  been  given  to  the  other  party  of  such 
application. 


309 

In  case  either  the  said  city  or  the  company  shall  at  any 
time  desire  the  removal  of  the  third  engineer  and  the  ap- 
pointment of  another  engineer  in  his  place,  the  party  de- 
siring such  removal  and  new  appointment  may,  upon  giv- 
ing ten  (10)  days'  written  notice  thereof  to  the  other 
party,  apply  to  the  said  judges  for  such  removal,  and  the 
said  judges  or  a  majority  of  them  shall  within  ten  (10) 
days  from  and  after  such  application  set  the  same  for  in- 
formal and  summary  public  hearing,  at  which  the  party 
desiring  the  removal  shall  publicly  present  its  reasons  for 
asking  such  removal. 

Upon  such  application  of  either  the  said  city  or  the 
company,  the  said  judges  or  a  majority  of  them  shall 
have  the  power,  but  shall  not  be  required  to  remove  the 
said  third  engineer.  The  third  engineer  shall  not  be  re- 
moved by  the  said  judges  or  a  majority  of  them  at  any 
time,  except  upon  the  application  of  either  the  said  city 
or  the  company. 

Upon  the  refusal  or  failure  of  the  said  judges  then  con- 
stituting tlie  (main)  Api>ellate  Court  for  the  First  Dis- 
trict of  Illinois,  or  a  majority  of  them,  to  make  the  ap- 
pointment herein  authorized  within  thirty  (30)  days 
after  being  requested  so  to  do,  either  the  said  city  or  the 
company  may,  upon  giving  ten  (10)  days'  written  notice 
to  the  other  party  of  its  intention  so  to  do,  apply  to  any 
judge  of  the  Circuit  Court  of  Cook  County,  Illinois,  for 
the  appointment  of  a  third  engineer  to  fill  any  vacancy 
existing  in  said  position,  and  the  judge  so  applied  to  shall 
have  the  power  to  appoint  such  third  engineer,  who,  when 
appointed,  shall  be  a  member  of  said  board,  and  shall  be 
subject  to  removal  in  the  manner  hereinabove  provided. 

Either  the  company  or  the  city  shall  have  the  right  to 
apply  to  any  court  of  competent  jurisdiction  for  the  i*e- 
moval  of  any  member  of  said  Board  of  Supervising  Engi- 


310 

neers  for  fraud,  corruption,  or  failure  to  perform  in  good 
faith  his  duties  under  this  ordinance. 

A  majority  of  said  Board  of  Sux)ervising  Engineers 
shall  at  all  times  be  authorized  to  exercise  the  powers  con- 
ferred by  this  ordinance  on  said  board. 

All  words  in  this  ordinance  contained  purx)orting  to 
give  authority  to  said  Board  of  Supervising  Engineers 
shall  be  construed  as  giving  such  authority  to  a  majority 
of  said  board. 

SALARIES  AND  EXPENSES  OF  SAID  BOARD. 

The  said  Board  of  Supervising  Engineers  shall  main- 
tain an  office  in  the  said  city  and  shall  employ  the  neces- 
sary assistance  and  purchase  the  necessary  supplies  and 
materials  to  enable  it  properly  to  perform  its  duties  under 
this  ordinance. 

The  said  third  engineer  shall  be  ex-officio  chairman  of 
the  board,  and  shall  be  paid  for  his  services  as  a  member 
of  said  board  compensation  at  the  rate  of  fifteen  thousand 
dollars  ($15,000.00)   per  annum. 

During  the  period  of  "Immediate  Eehabilitation,"  said 
Bion  J.  Arnold,  so  long  as  he  continues  to  act  as  a  mem- 
ber of  said  board,  shall,  in  addition  to  his  duties  as  a 
member  of  said  Board  of  Supervising  Engineers,  act  as 
chief  engineer  of  the  work  contemplated  in  this  ordinance, 
and  shall  receive  as  additional  compensation  for  such 
service,  the  sum  of  fifteen  thousand  dollars  ($15,000.00) 
per  annum.  In  such  capacity  he  shall  have  charge  of  the 
preparation  of  the  plans  and  specifications,  and  the  gen- 
eral direction  of  the  entire  work,  and  of  its  inspection 
during  construction.  Said  plans  and  specifications  and 
system  of  inspection  shall  be  subject  to  the  approval  of 
the  Board  of  Supervising  Engineers. 

Each  of  the  other  two  members  of  said  board  shall,  in 
addition  to  attending  the  monthly  meetings  of  the  board, 
attend  such  other  meetings  as  may  be  called  by  the  chair- 


311 

man,  and  be  paid  for  his  services  as  a  member  of  said 
board,  compensation  at  the  rate  of  one  hundred  dollars 
($100.00)  per  day,  and  his  traveling  and  living  expenses 
while  away  from  his  home,  and  actually  engaged  upon 
this  work,  it  being  understood  that  his  total  compensa- 
tion for  services  shall  not  be  less  than  thirty-six  hundred 
dollars  (|3,600.00)  nor  more  than  ten  thousand  dollars 
(|10,0OO.0O)  per  year.  The  chairman  of  said  board  shall' 
call  (in  addition  to  such  meetings  as  he  may  deem  de- 
sirable or  necessary)  a  meeting  of  said  board  at  any  time 
upon  request  of  the  president  of  either  of  said  companies, 
or  the  mayor  of  said  city. 

The  salaries  and  expenses  of  said  Board  of  Supervising 
Engineers  during  the  period  of  "Immediate  Rehabilita- 
tion" provided  for  in  this  ordinance  shall  be  added  to  and 
form  a  part  of  the  cost  of  such  "Immediate  Rehabilita- 
tion," but  thereafter  shall  be  paid  out  of  gross  receipts, 
as  an  operating  expense. 

In  case  the  said  ordinance  to  the  said  Chicago  Rail- 
ways Company  is  passed  and  accepted  by  said  Chicago 
Railways  Company,  the  third  engineer  and  the  engineer 
representing  the  city  on  the  Board  of  Supervising  Engi- 
neers created  by  said  ordinance  shall  be  the  same  persons 
who  act  as  the  third  engineer  and  the  engineer  represent- 
ing the  city,  respectively,  in  the  Board  of  Supervising 
Engineers  created  by  this  ordinance;  and  the  said  Chi- 
cago Railways  Company  and  the  Chicago  City  Railway 
Company  shall  ^gree  upon  one  engineer  as  their  joint 
representative  upon  said  Board;  but  in  case  they  do  not 
so  agree,  each  of  said  companies  may  select  its  own  rep- 
resentative, who  shall  in  such  case  act  as  a  member  of 
said  board  only  in  the  consideration  and  determination  of 
matters  relating  to  the  street  railways  and  property  of  the 
particular  company  he  represents. 


312 

In  the  determination  of  any  matter  relating  to  subways 
and  through  routes  and  all  other  matters  in  which  said 
companies  are  jointly  interested  the  representative  of  each 
of  said  companies  on  said  Board  of  Supervising  Engi- 
neers shall  be  entitled  to  one-half  of  a  vote. 

In  case  said  ordinance  to  said  Chicago  Railways  Com- 
pany is  passed  and  accepted  by  said  company,  the  salaries 
and  compensation  of  said  engineers  provided  for  in  this 
ordinance  shall  include  all  compensation  or  salaries  pay- 
able to  said  engineers  under  said  other  ordinance  without 
duplication,  and  shall  be  equitably  apportioned  by  the 
said  third  engineer  between  the  said  two  companies,  tak- 
ing into  consideration  the  work  done  by  said  board  under 
the  said  ordinances,  respectively,  and  the  determination 
of  said  third  engineer  as  to  such  apportionment  shall  be 
final  and  binding  upon  the  parties  whose  interests  are 
therein  concerned. 

CITY  TO  RESERVE  POLICE  POWER. 

Sec.  S5.  Nothing  in  this  ordinance  contained  shall  be 
construed  as  depriving  the  said  city  of  the  right  of  exer- 
cising any  police  i)Ower  which  it  would  have  possessed  or 
enjoyed  had  this  ordinance  not  been  granted. 

The  enumeration  herein  of  special  requirements  and  spe- 
cific regulations  shall  not  be  taken  or  held  to  imply  the  re- 
linquishment by  the  said  city  of  its  power  to  make  other 
requirements  or  regulations,  and  the  said  city  hereby  ex- 
pressly reserves  the  right  to  make  all  regulations  which 
may  be  necessary  to  secure  in  the  most  ample  manner  the 
safety,  welfare  and  accommodation  of  the  public,  includ- 
ing among  other  things  the  right  to  pass  and  enforce  or- 
dinances to  protect  the  public  from  danger  or  inconveni- 
ence in  the  management  and  operation  of  street  railways 
throughout  the  said  city  and  the  right  to  make  and  en- 
force all  such  regulations  as  shall  be  reasonably  necessary 
to  secure  adequate  and  sufficient  street  railway  accom- 


313 

modations  for  the  people,  and  insure  their  comfort  and 
convenience. 

The  said  council  may  vest  any  or  all  matters  of  admin- 
istration under  this  ordinance,  including  such  thereof  as 
are  herein  vested  in  the  mayor,  comptroller  or  other  city 
officials  named  in  this  ordinance  or  in  said  Exhibit  B  at- 
tached hereto  (but  excepting  those  herein  vested  in  said 
Board  of  Supervising  Engineers),  in  a  department  or 
bureau  of  local  transportation,  or  in  its  city  engineer,  or 
in  any  official  or  employes  of  said  city. 

C50MPEEHENSIVB    EECONSTUCTION     AND     UNIFIED    OPEEATION 

ASSURED. 

Sec.  36.  For  the  purpose  of  carrying  into  effect  the 
purpose  and  desire  of  the  said  city  to  provide  for  the  uni- 
fied operation  and  the  comprehensive  reconstruction  of 
all  the  street  railways  within  said  city,  an  ordinance  sim- 
ilar to  this  ordinance  in  general  provisions  and  character, 
covering  the  system  of  street  railways  now  maintained 
and  operated  by  the  receivers  of  the  Chicago.  Union  Trac- 
tion Company,  granting  to  the  Chicago  Railways  Com- 
pany the  right  to  operate  said  system,  has  been  presented 
for  passage  by  the  city  council  of  said  city,  concurrently 
with  this  ordinance,  and  it  is  hereby  expressly  provided 
that  in  the  event  that  the  company  accepts  this  ordinance 
and  files  the  bond  as  required  in  this  ordinance  within 
the  time  herein  prescribed  and  the  said  Chicago  Railways 
Company  fails  to  accept  the  said  ordinance  to  the  said 
Chicago  Railways  Company  after  its  passage  and  within 
the  time  and  according  to  the  terms  provided  therein,  or 
in  any  ordinance  amendatory  thereof  or  supplementary 
thereto,  the  company  hereby  obligates  itself  to  extend  and 
operate  its  street  railway  system  over  and  upon  tlie 
streets  and  parts  of  streets  in  the  said  city  covered  by 
the  said  ordinance  to  the  said  Chicago  Railways  Company, 
so  far  as  and  to  the  extent  that  the  rights  of  the  compa- 


314 

nies  now  operating  the  street  railways  upon  such  streets 
and  parts  of  streets  cease  and  expire  by  limitation  or 
otherwise,  the  said  street  railway  system  of  the  company 
to  be  extended  over  each  such  street  or  part  of  street  as 
rapidly  as  and  to  whatever  extent  the  said  city  is  able  to 
and  does  confer  upon  the  company  lawful  authority  to 
construct  and  operate  street  railways  uipon  such  streets 
and  parts  of  streets,  respectively,  and  deliver  to  the 
company  x)«aceable  possession  thereof  for  such  purposes. 
And  the  company  hereby  agrees  to  construct  and  operate  in 
each  such  street  and  part  of  street  so  turned  over  to  it  as 
aforesaid,  the  street  railways  and  equipment  required  by 
the  ordinance  to  said  Chicago  Kailways  Company  to  be 
constructed  by  it  therein,  including  the  reconstruction  of 
the  tunnels  under  the  Chicago  river  at  Washington  and 
La  Salle  streets,  respectively,  and  the  making  of  tlie  con- 
tribution for  the  construction  of  subways  and  extensions 
thereof  provided  for  in  said  last  mentioned  ordinance. 

And  the  said  company  agrees  that  it  will  furnish  the 
necessary  moneys  to  pay  or  to  enable  said  city  to  pay  for 
the  physical  property  constituting  the  street  railways  and 
equipment  in  any  such  street  or  part  of  street  which  the 
city  or  its  licensee  may  be  authorized  or  required  to  pur- 
chase under  and  in  accordance  with  the  terms  of  the  ordi- 
nances of  said  city  which  have  been  heretofore  passed 
and  are  now  in  force  with  respect  to  any  such  street  or 
part  of  street,  respectively,  property  so  purchased  to  be 
turned  over  to  the  company  as  a  part  of  the  extension  of 
the  company's  system  provided  for  in  this  section,  and 
the  moneys  so  paid  or  advanced  shall  be  held  and  consid- 
ered as  a  part  of  the  expense  of  making  such  extension. 
For  the  purpose  of  making  any  such  extension  tJie  com- 
pany agrees  that  it  will,  when  authorized  and  required 
by  the  city,  purchase  and  pay  for  the  physical  property 
constituting  the  then  existing  street  railway  and  equip- 


315 

ment  located  upon  any  street  or  part  of  street  turned 
over  to  the  company  under  the  foregoing  provisions  of 
this  section,  provided  the  price  to  be  paid  for  such  prop- 
erty shall  not  exceed  the  value  of  the  same  for  street  rail- 
way purposes  as  estimated  by  the  Board  of  Sux)ervising 
Engineers,  and  that,  when  acquired,  said  property  shall 
be  used  by  the  company  as  a  part  of  the  extension  of  its 
system  upon  such  street  or  part  of  street  under  the  pro- 
visions of  this  ordinance,  and  that  the  amount  x>aid  for 
such  property  shall  be  held  and  considered  as  a  part  of 
the  cost  of  making  such  extension  under  the  provisions  of 
this  ordinance. 

All  such  extensions  of  the  company's  system  and  the 
operation  thereof  shall  be  subject  to  the  provisions  of  this 
ordinance,  in  the  same  manner  and  to  the  same  extent 
as  if  herein  expressly  provided  for  as  a  part  of  the  street 
railway  system  of  the  company  covered  by  this  ordinance. 

The  construction  and  equipment  of  all  such  extensions 
shall  be  made  under  the  supervision  of  and  the  cost  there- 
of determined  by  the  said  Board  of  Supervising  Engi- 
neers, and  such  extensions  shall  be  in  all  respects  subject 
to  the  provisions  of  this  ordinance  as  to  purchase  by  the 
said  city  or  its  licensee,  the  determination  of  the  charac- 
ter and  cost  of  construction,  reconstruction,  equipment 
and  re-equipment,  the  annual  return  to  the  company  upon 
its  investment,  the  division  of  profits  with  the  said  city 
and  the  operation  of  such  extensions  by  the  company,  so 
far  as  such  provisions  can  be  made  applicable  thereto. 

The  city  agrees  that,  in  case  it  shall  require  the  com- 
pany to  extend  its  street  railway  system  over  or  upon  any 
street  or  part  of  street  covered  by  the  said  ordinance  to 
the  said  Chicago  Railways  Company,  under  the  provisions 
of  this  section,  the  company  shall  have  the  right  to  extend 
its  street  railway  system  over  and  upon  all  of  the  streets 
and  parts  of  streets  covered  by  the  ordinance  to  the  said 


316 

Chicago  Railways  Company,  upon  the  terms  specified  in 
this  section,  when  and  as  soon  as  the  now  existing  rights 
of  other  companies  in  said  streets  or  parts  of  streets, 
respectively,  shall  expire  or  be  terminated. 

The  obligations  of  the  company  under  this  section  to 
construct,  reconstruct,  equip,  re-equip  ajid  operate  street 
railways,  tunnels  and.  subways,  and  to  furnish  funds  to 
the  city  for  the  purposes  specified  in  this  section,  may  be 
discharged  either  by  the  company  itself,  or  at  its  election, 
from  time  to  time,  either  in  whole  or  in  part,  through  the 
agency  of  the  Chicago  City  Eailroad  Company  (herein- 
after called  the  railroad  company),  a  corporation  organ- 
ized under  the  laws  of  the  state  of  Illinois,  provided  that 
the  company  shall  first  enter  into  such  contracts  and  ar- 
rangements with  the  railroad  company  as  shall  secure  and 
make  certain  the  operation  of  the  lines  of  street  railways 
constructed  by  the  railroad  company  as  an  integral  part 
of  the  street  railway  system  of  the  company,  and  also 
shall  secure  to  the  city  and  its  licensee  and  to  the  public 
the  same  rights  in  and  upon  all  of  the  said  lines  of  the 
street  railways,  tunnels  and  subways  of  the  company, 
falling  within  the  provisions  of  this  section,  which  would 
have  existed  if  the  entire  obligations  of  the  company 
under  this  section'  had  been  discharged  by  it  directly 
without  the  intervention  of  the  railroad  company,  includ- 
ing the  right  of  the  city  or  its  licensee  to  purchase  all 
such  lines  of  street  railways  (including  all  interest  in 
tunnels  and  subways),  in  the  same  manner  and  upon  the 
same  terms  and  conditions  as  though  all  and  every  part 
thereof  had  been  constructed,  or  the  money  therefor 
had  been  advanced,  by  the  company,  without  any  interest 
therein  having  at  any  time  been  in  the  railroad  company. 

The  railroad  company,  in  consideration  of  the  passage 
of  this  ordinance,  hereby  assumes  and  agrees  to  discharge 
all  the  obligations  assumed  or  imposed,  or  attempted  to 


317 

l>e  assumed  or  imposed,  ui>on  the  comjxinj  as  to  street 
railways,  tunnels  and  subways  within  the  north  and  west 
divisions  of  the  city  of  Chicago,  in  all  respects  the  same 
as  though  it  had  been  named  in  place  of  the  company  in 
the  foregoing  clauses  of  this  section;  and  agrees'  that  all 
the  work  done  by  it  and  the  moneys  advanced  by  it  shall 
be  subject  to  all  the  provisions  of  this  section,  and  of  all 
tJie  other  sections  of  this  ordinance,  to  the  same  extent 
and  in  the  same  manner  as  though  said  obligations  had 
been  discharged  by  the  company,  and  all  moneys  advanced 
by  the  railroad  company  had  been  advanced  by  the  com- 
pany. 

The  railroad  company  further  agrees  that  the  city  and 
its  licensee  and  the  public  shall  have  the  same  rights  in 
and  upon  any  and  all  of  the  lines  of  street  railways,  tun- 
nels and  subways  constructed  in  whole  or  in  part  by  it,  or 
\vdth  moneys  advanced  by  it,  which  they  would  have  had 
if  the  same  had  been  constructed  and  the  contributions 
to  the  cost  thereof  had  been  made  wholly  by  the  company 
under  the  terms  and  provisions  of  this  section,  without 
the  intervention  of  the  railroad  company,  including  the 
right  of  the  city  or  its  licensee  to  purchase  such  si:reet 
railways  and  other  proi)erty  or  interests  therein,  in  the 
same  manner,  for  the  same  price  and  upon  the  same  terms 
and  conditions  as  though  all  and  every  part  thereof  had 
been  constructed  or  the  money  therefor  had  been  ad- 
vanced by  the  company,  without  any  interest  therein  hav- 
ing at  any  time  been  in  the  railroad  company;  and  the 
railroad  company  hereby  consents  and  agrees  that  the 
entire  purchase  price  tberefor  may  be  included  in  one 
sum  paid  to  or  deposited  to  the  credit  of  the  company 
under  the  terms  and  provisions  of  this  ordinance,  the 
railroad  company  agreeing  to  rely  wholly  upon  its  agree- 
ment with  tlie  company  for  its  interest  in,  or  share  of, 
such  purchase  price.    The  railroad  company  and  the  com- 


318 

pany  further  undertake  and  agree  that  all  street  railways, 
tunnels  and  subways,  and  otlier  railway  properties  ac- 
quired, constructed  or  operated  under  the  provisions  of 
this  section,  including  those  constructed  by,  or  the  cost  of 
which  shall  be  defrayed  in  whole  or  in  part  by  the  rail- 
road company,  shall  form,  and  be  operated  as,  an  integral 
part  of  the  street  railway  system  of  the  company,  under 
a  lease  or  leases,  or  operating  agreement  or  operating 
agreements,  between  the  railroad  company  and  the  com- 
pany. 

The  railroad  company  by  its  acceptance  of  this  ordi- 
nance expressly  agrees  with  the  said  city  that  all  the 
terms,  provisions  and  conditions  of  this  ordinance  shall 
8-PPlj  to  and  control  the  construction  and  operation  of 
any  street  railway  properties  in  which  it  shall  have  any 
interest,  or  to  the  cost  of  which  it  shall  contribute,  in 
like  manner  and  to  the  same  extent  as  though  such  street 
railway  properties  were  wholly  constructed  and  operated, 
and  the  contributions  to  the  cost  thereof  were  made  by 
the  company.  And  the  railroad  company  and  the  com- 
pany further  covenant  and  agree  with  the  city,  that  as 
between  the  city  and  the  railroad  company  and  the  com- 
pany, all  books  of  account,  settlements,  charges  on  capital 
account,  payments  or  interest  on  capital  account,  expendi- 
tures and  dejwsits  on  account  of  maintenance,  repairs 
and  renewals,  and  the  division  of  net  receipts,  shall  be 
made  with  regard  to  the  entire  properties  constructed 
under  or  operated  by  both  of  said  companies  under  this 
ordinance,  as  though  the  ownership,  operation  and  con- 
trol of  the  same  were  wholly  and  solely  in  the  companj-, 
to  the  end  that  the  rights  of  the  city  under  this  ordinance 
shall  in  no  wise  be  different  in  any  respect  from  what 
they  would  have  been  if  the  entire  street  railway  proper- 
ties (including  subways  and  tunnels)  affected  by  this  or- 
dinance had  been  constructed,  operated,  and  the  contribu- 


819 

tions  to  the  cost  thereof  made  wholly  and  solely  by  the 
company. 

The  company  further  agrees  that  a  forfeiture  of  all 
of  its  rights  and  privileges  under  this  ordinance  may  be 
declared  and  enforced  for  any  default  of  the  railroad 
company  in  the  observance  or  performance  of  any  agree- 
ment or  condition  herein  contained  to  be  kept  and  per- 
formed by  it,  in  like  manner  and  with  like  effect  as 
though  such  default  was  the  default  of  the  company ;  and 
the  railroad  company  covenants  and  agrees  that  any  for- 
feiture of  the  rights  and  privileges  of  the  company  shall 
operate  and  be  effective  as  a  forfeiture  of  all  of  the 
rights  and  privileges  of  the  railroad  company  under  this 
ordinance,  to  the  same  extent  and  with  the  same  effect 
as  the  rights  and  privileges  of  the  company  shall  have 
been  forfeited  by  reason  of  such  default. 

The  company  further  agrees  that  if  any  of  the  agree- 
ments or  undertakings  on  the  part  of  the  company  in 
this  ordinance  contained  shall  be  ultra  vires  such  fact 
Shall  in  nowise  affect  or  impair  the  right  of  the  city  to 
declare  a  forfeiture  of  all  the  rights  and  privileges  by 
this  ordinance  granted  to  the  company,  on  account  of  the 
non-performance  of  any  such  ultra  vires  agreement  or  un- 
dertaking, in  the  same  manner  and  with  like  effect  as 
though  all  of  such  agreements  and  undertakings  were 
within  the  company's  chartered  powers,  the  gi*ants  herein 
made  to  the  company  being  expressly  conditioned  on  the 
performance  of  each  and  every  one  of  the  agreement*;  and 
undertakings  of  the  company  herein  contained,  the  for- 
feiture of  the  company's  rights,  however,  to  be  made  in 
the  manner  and  with,  the  effect  provided  in  Section  31  of 
this  ordinance. 

ORDINANCE    BINDING    UPON    SUCCESSORS    AND    ASSIGNS. 

Sec.  37.  This  ordinance  shall  inure  to  the  benefit  of 
and  be  binding  upon  the  lessees,  successors  and  assigns 


320  ' 

of  the  company,  and  thev  and  eacli  of  them  shall  be 
bound  hy  all  and  every  its  provisions  by  the  company  to 
be  kept  and  performed,  precisely  as  if  in  every  case  they 
had  respectively  been  named  herein  with  the  company. 

LEASE  OR  ASSIGNMENT. 

Sec.  38.  No  lease,  or  operating  agreement,  and  no  as- 
signment (except  by  way  of  mortgage  or  trust  deed,  under 
the  foregoing  provisions  and  limitations  of  this  ordi- 
nance), shall  be  made  by  the  company  without  the  con- 
sent of  the  city  council  of  said  city. 

WARRANTY  OF  TITLE. 

Sec.  39.  Whenever  the  city,  or  its  licensee,  shall  de- 
sire to  purchase  and  take  over  the  street  railway  system 
of  the  company  within  the  said  city,  as  in  this  ordinance 
provided,  and  shall  comply  with  the  provisions  of  this 
ordinance  with  respect  to  making  such  purchase  and  pay- 
ment therefor,  the  company  shall,  by  good  and  sufficient 
written  instruments  to  that  end,  transfer  to  the  city,  or 
its  licensee,  as  the  case  may  be,  all  its  said  street  railway 
system  and  property,  free  from  all  claims  and  liens  what- 
soever, and  the  company  shall  warrant  the  title  to  all  of 
the  property  so  transferred  to  the  city  or  its  licensee,  to 
be  free  from  all  claims  and  liens  whatsoever,  and  also  that 
there  are  no  outstanding  rights  in  the  streets  or  parts  of 
streets  occupied  by  its'  street  railways,  in  any  person  or 
corporation,  derived  through  or  under  said  company,  ex- 
cept the  rights  of  the  Chicago  General  Railway  Company 
on  Twenty^Second,  Main  and  Laurel  streets  under  the 
leases  referred  to  in  Section  1  of  this  ordinance,  and  if 
at  the  date  of  said  purchase  there  shall  exist  any  defect 
in  or  incumbrance  upon  the  company's  title  to  any  of  the 
real  estate  now  owned  by  the  company,  an  amount  of  the 
purchase  price  equal  to  the  appraised  value  of  the  real 
estate,  the  title  to  which  shall  be  incumbered  or  defective, 


321 

as  shown  by  the  appraisal  inventory  made  by  Bion  J. 
Arnold,  Mortimer  E.  Cooley  and  A.  B.  du  Pont,  herein- 
before mentioned,  shall  remain  in  one  or  more  of  the  de- 
positaries with  which  the  city  or  its  licensee  shall  deposit 
the  purchase  money  for  said  street  railway  properties 
until  such  defects  and  incumbrances  shall  be  cured  or  re- 
moved, as  security  to  the  purchaser  against  loss  by  rea- 
son of  such  defects  or  incumbrances. 

BOND, 

Sec.  40.  The  company  shall  forever  indemnify  and 
save  harmless  the  said  city  against  and  from  all.  damages, 
judgments,  decrees,  costs  and  expenses  which  the  said 
city  may  suffer  or  which  may  be  recoverable  from  or  ob- 
tained against  the  said  city,  for  or  by  reason  of  the  grant- 
ing of  the  privileges  hereby  conferred  upon  the  com- 
pany, or  for  or  by  reason  of  or  growing  out  of  or  result- 
ing from  the  exercise  by  the  company  of  the  privileges 
hereby  granted,  or  any  of  them,  or  from  any  act  or  acts 
of  the  company,  its  servants  or  agents,  under  or  by 
virtue  of  the  provisions  of  this  ordinance. 

And  the  company  shall,  within  the  time  limited  for  the 
acceptance  of  this  ordinance,  file  with  the  city  clerk  of 
said  city  its  bond  to  the  said  city,  in  the  penal  sum  of 
one  hundred  thousand  dollars,  conditioned  that  it  will 
forever  indemnify  and  save  harmless  the  said  city  as 
aforesaid ;  provided,  however,  that  the  giving  of  said  bond 
or  the  recover^'  of  a  judgment  or  judgments  thereon  by 
the  said  city  shall  not  be  construed  as  measuring,  lessen- 
ing or  limiting  the  liability  of  the  company  to  the  said 
city  under  and  provisions  of  this  ordinance. 

RIGHTS    AND    OBLIGATIONS    DATE    PROM    FEBRUARY    1,    1907. 

Sec.  41.  If  the  company  shall  accept  this  ordinance 
within  the  time  limited  therein  for  the  acceptance  thereof, 
then  the  rights  and  obligations  of  the  citv  and  the  com- 


322 

pany  under  this  ordinance  shall  be  the  same  as  if  this 
ordinance  had  been  passed  on  February  first,  1907,  and 
had  been  accepted  by  the  company  on  February  first, 
1907,  and  accounting  shall  be  had  as  between  the  city 
and  the  company  as  of  that  date. 

ACCEPTANCE. 

Sec.  42.  This  ordinance  shall  not  take  effect  or  be  in 
force  unless  and  until  a  majority  of  the  votes  cast  upon 
the  following  question  of  public  policy  at  the  election  to 
be  held  in  the  city  of  Chicago,  on  the  first  Tuesday  in 
April,  A.  D.  1907,  are  in  the  affirmative: 

"For  the  approval  of  ordinances  substantially  in 
the  form  of  the  pending  ordinances   (reported  to 
the  city  council  of  the  city  of  Chicago   on   Jan- 
nary  15,  A.  D.  1907),  authorizing  the  Chicago  City 
Railway  Company  and  the  Chicago  Railways  Com- 
pany, respectively,  to  construct,  maintain  and  oper- 
ate street  railways  in  said  city,  and  providing  for 
the  purchase  thereof  by  the  said  city  or  its  licen- 
see." 
In  the  event,  and  only  in  the  event,  that  the  said  ques- 
tion of  public  policy  is  submitted  to  the  electors  of  said 
city  at  said  election  and  a  majority  of  the  votes  cast 
upon  the  said  question  at  said  election  are  in  the  affirma- 
tive, then,  and  in  that  event,  this  ordinance  shall  take 
effect  and  be  in  force  from  and  after  its  acceptance  by 
the  company  and  by  the  railroad  company,  under  their 
respective  corporate  seals,  after  the  said  first  Tuesday 
in  April,  A.  D.  1907;  provided,  that  if  the  company  shall 
not  file  with  the  city  clerk  of  said  city  the  penal  bond 
above  herein  mentioned,  or  if  either  the  company  or  the 
railroad  company  shall  not  file  its  formal  acceptance  of 
this  ordinance  and  of  all  its  terms  and  conditions  within 
ninety  (90)  days  from  the  passage  hereof,  then  all  rights 


323 

and  privileges  hereby  granted  shall  be  wholly  null  and 
void  and  of  no  effect;  the  acceptance  of  this  ordinance  by 
both  of  said  companies  being  hereby  made  a  condition  of 
this  ordinance  taking  effect. 


324 


No.  3 

Ordinance  No.  16238-A. 
AN  OKDINANCE  granting  a  renewal  of  the  street  rail- 
way grants  of  The  Cleveland  Railway  Company,  fix- 
ing the  terms  and  conditions  of  such  renewal  grant, 
changing  the  rates  of  fare,  regulating  transfers  and 
terminating  existing  grants. 

Whereas,  The  Cleveland  Railway  Company  is  the  owner 
of  a  system  of  street  railroads  within  the  city  of  Cleve- 
land; and 

Whereas,  The  Forest  City  Railway  Company,  The 
Municipal  Traction  Company  and  The  Cleveland  Rail- 
way Company  are  parties  to  litigation  affecting  the  own- 
ership of  various  unexpired  street  railroad  grants  for 
lines,  all  of  which  lines  are  now  operated  by  a  receiver 
appointed  by  the  Circuit  Court  of  the  United  States  for 
the  Northern  District  of  Ohio,  Eastern  Division;  and 

Whereas,  It  is  the  common  desire  of  the  city  and  The 
Cleveland  Railway  Company  to  have  all  the  grants  of 
street  railway  rights  in  the  city  of  Cleveland  now  out- 
standing surrendered  and  renewed  upon  terms  herein- 
after recited,  to  the  end  that  the  rate  of  fare  may  be 
reduced,  the  transfer  privileges  made  definite  and  the 
right  of  the  city  as  to  regulation  and  possible  acquisition 
made  certain;  and 

Whereas,  It  is  agreed  that  a  complete  re-adjustment 
of  the  street  railroad  situation  should  be  made  upon 
terms  that  will  secure  to  the  owners  of  the  property  in- 
vested in  street  railroads  securities  as  to  their  property, 
and  a  fair  and  fixed  rate  of  return  thereon,  at  the  same 
time  securing  to  the  public  the  largest  powers  of  regula- 
tion in  the  interest  of  public  service  and  the  best  street 


325 

railroad  transportation  at  cost,  consistent  with  the  secur- 
ity of  the  property  and  the  certainty  of  a  fixed  return 
thereon  and  no  more; 

Now,  therefore,  be  it  ordained  by  the  council  of  the 
city  of  Cleveland,  State  of  Ohio,  that 

Section  1.  Wherever  in  the  following  ordinance  the 
words  "The  Cleveland  Railway  Company,"  "The  Com- 
pany," or  "said  Company"  are  used,  they  shall  be  held 
to  meaji  and  include  The  Cleveland  Railway  Company; 
wherever  the  words  "the  City"  are  used,  they  shall  be 
held  to  mean  and  include  the  city  of  Cleveland,  and 
wherever  officers  of  the  city  of  Cleveland  are  mentioned 
by  the  name  of  their  office  or  their  descriptive  designa- 
tion, such  description  shall  be  held  to  mean  and  include 
the  incumbents  of  any  offices  hereafter  created,  perform- 
ing functions  similar  to  those  now  imposed  by  law  upon 
the  officers  designated  herein. 

Wherever  in  this  ordinance,  except  in  Section  48,  the 
expression  "taking  effect  of  this  ordinance"  is  used,  it 
shall  be  held  to  mean  the  thirty-first  day  after  the  pas- 
sage and  due  publication  of  this  ordinance,  no  petition 
for  its  submission  to  popular  vote  having  been  presented 
or  filed  in  accordance  with  the  statute  in  such  case  made 
and  provided,  or  if  such  petition  has  been  presented  or 
filed,  the  day  following  the  official  ascertainment  that  a 
majority  of  the  popular  vote  at  the  submission  of  this 
ordinance  to  vote  has  been  in  favor  of  this  ordinance. 

Sec.  2.  The  Cleveland  Railway  Company  is  hereby 
granted,  upon  the  conditions  herein  provided,  a  renewal 
until  the  1st  day  of  May,  1934,  of  the  right  to  maintain 
and  operate  its  existing  street  railroad,  by  single  or  more 
tracks,  as  the  same  now  exists  in  the  city  of  Cleveland, 
with  all  necessary  curves,  street  crossings,  connections, 
turn-outs,  cross-overs,  Ys,  loops,  poles,  trolley-,  feed-, 
span-,  and   guy-wires,   equipment  and  other  appliances. 


326 

upon,  over  and  along  the  following  streets,  parts  of 
streets  and  other  public  ways  and  places  in  the  city  of 
Cleveland,  said  streets  being  grouped  into  numbered 
streets  east  of  the  north  and  south  meridian,  numbered 
streets  west  tliereof,  named  streets  alphabetically  ar- 
ranged, and  private  rights-of-way. 

(Here  follows  a  list  of  streets,  and  it  is  recited  that 
the  city  owns  the  tracks  in  some  parts  thereof.) 

Sec.  3.  The  motive  power  for  the  operation  of  the 
company's  railway  shall  be  electricity,  or  such  other  mo- 
tive power  as  council  shall  approve,  the  construction  and 
equipment  first  class  and  to  the  satisfaction  of  the  city. 
The  tracks  hereafter  laid  in  paved  streets,  either  as  new 
construction  or  as  renewal  of  existing  construction  shall, 
with  respect  to  their  style  and  construction,  conform  to 
the  general  ordinances  of  the  city  as  the  same  now  are, 
or  as  they  may  be  hereafter. 

Sec.  4.  The  right  is  hereby  given  to  the  company  to 
maintain  its  present  lines  of  poles  and  wires,  and  to 
erect  and  maintain  such  other  lines  of  poles  and  wires 
as  may  be  necessary  to  connect  its  power  houses  and  its 
said  street  railroad  system,  and  to  maintain  its  feeder 
caWes  as  at  present  located  in  the  city  water  works  tun- 
nel, or  hereafter  located  in  said  tunnel  or  other  tunnels 
or  conduits,  with  the  permission  of  the  city,  and  upon 
the  payment  by  the  company  of  such  reasonable  annual 
charge  as  the  city  may  from  time  to  time  make  therefor 
for  all  users  thereof  and  to  maintain  its  present  intake 
and  discharge  water  pipes  and  intake  cribs  between  its 
power  house  on  Washington  avenue,  N.  W.,  and  the  Cuya- 
hoga river,  and  such  other  intakes  as  may  be  hereafter 
authorized  by  said  city,  and  wherever  any  of  the  routes 
provide  for  or  include  private  right-of-way  or  property, 
the  company  is  granted  the  right  to  maintain  and  operate 
its  tracks  on  and  across  any  and  all  intervening  streets, 


327 

and  to  maintain  all  poles  and  wires  necessary  to  such 
purpose. 

Sec.  5.  The  city  reserves  the  right  to  grant  to  any 
other  person  or  corporation  the  right  jointly  to  occupy 
and  use  for  street  railroad  purposes,  within  the  follow- 
ing described  territory,  the  whole  or  any  part  of  the 
tracks,  poles,  wires  and  electric  current  herein  author- 
ized to  be  maintained  and  operated,  and  all  other  appli- 
ances and  powder  now  or  hereafter  used  for  street  railway 
purposes,  said  territory  being  known  as  the  central  dis- 
trict of  the  city,  bounded  as  follows: 

Beginning  at  the  shore  of  Lake  Erie  at  the  intersection 
of  the  east  line  of  East  12th  street  projected  to  said  shore 
of  Lake  Erie ;  thence  along  the  east  line  of  said  East  12th 
street  and  East  12th  street  projected,  southerly  to  the 
southerly  line  of  Central  avenue  S.  E. ;  thence  along  the 
southerly  line  of  Central  avenue  S.  E.  to  the  southerly 
line  of  the  Central  Viaduct  and  its  approaches;  thence 
along  the  southerly  line  of  the  Central  Viaduct  and  its 
approaches  to  the  easterly  line  of  West  14th  street;  thence 
along  the  easterly  line  of  West  14th  street  to  the  south- 
erly line  of  Abbey  avenue  S.  W.  projected;  thence  along 
the  southerly  line  of  Abbey  avenue  S.  W.  projected  and 
the  southerly  line  of  Abbey  avenue  S.  W.  bridge  and  its 
approaches  to  the  southerly  line  of  Lorain  avenue;  thence 
along  the  southerly  line  of  Lorain  avenue  to  the  westerly 
line  of  West  25th  street ;  thence  along  the  westerly  line  of 
West  25th  street  to  the  southeriy  line  of  Detroit  avenue 
N.  W. ;  thence  along  the  southerly  line  of  Detroit  avenue 
N.  W.  to  the  westerly  line  of  West  28th  street;  thence 
along  the  westerly  line  of  West  28th  street  and  along  said 
westerly  line  projected  to  its  intersection  with  Lake  Erie ; 
thence  along  the  southerly  shore  of  Lake  Erie,  as  the  same 
now  is  or  hereafter  may  be,  to  the  place  of  beginning. 


328 

The  right  of  joint  occupancy  and  use  herein  reserved 
shall  be  upon  such  reasonable  terms  and  conditions  as 
the  council  may  prescribe. 

Sec.  6.  The  construction,  rolling  stock,  equipment, 
maintenance  and  operation  of  the  street  railroads  herein 
authorized  shall  be  subject  to  and  governed  by  the  gen- 
eral street  railroad  ordinances  now  in  force,  except  as 
the  same  are  herein  modified,  and  future  ordinances  and 
regulations  of  the  city  not  inconsistent  herewith,  except 
that  the  company  shall  not  be  required  to  pay  any  car 
license  fee. 

Sec.  7.  The  company  shall  maintain  in  constant  re- 
pair the  pavement  within  a  space  seven  (7)  feet  in  width 
for  single-track  and  for  double-track  the  entire  space  be- 
tween the  outer  rails  of  both  tracks,  including  the  space 
between  the  two  tracks  and  one  foot  outside  of  each  outer 
rail,  but  in  no  event  to  exceed  eighteen  feet,  except  about 
curves,  special  work  and  where  there  are  more  than  two 
tracks  in  a  street  in  all  paved  streets  occupied  by  its 
tracks,  whether  such  streets  were  paved  at  the  time  of 
the  passage  of  this  ordinance,  or  subsequently  thereto, 
but  the  company  shall  not  be  required  to  repave  by  virtue 
of  this  obligation  to  repair,  nor  by  virtue  of  any  require- 
ment of  the  general  ordinances  of  the  City  of  Cleveland 
during  the  continuance  of  this  grant. 

Sec,  8.  The  company  at  once,  upon  the  taking  effect  of 
this  ordinance,  shall  proceed  by  the  acquisition  of  new 
cars  or  by  alteration  of  existing  cars  to  extend  the  pay- 
enter  system  of  fare  collections,  and  in  case  it  is  able, 
acting  in  good  faith,  to  raise  the  money  so  to  do,  within 
five  months  from  that  date,  the  company  shall  have  in 
use  upon  its  system  not  fewer  than  450  pay-enter  cars, 
and  in  18  months  from  that  date  shall  have  all  of  the 
cars  operated  by  it  equipped  as  pay-enter  cars,  provided 
that  small  open  cars  now  owned  by  the  company,  not  in 


329 

excess  of  100  in  number,  may  be  continued  in  use  by  the 
company  as  trailers.  The  phrase  "pay-enter  car,"  as 
used  in  this  oirdinance,  shall  be  held  to  mean  a  car 
equipped  with  a  fare-box  and  so  arranged  as  effectively 
to  provide  for  the  prepayment  of  fares  by  passengers. 
The  expense  of  the  acquisition  of  such  pay-enter  cars 
and  seventy -five  per  cent  (75^)  of  the  cost  of  reconstruct- 
ing or  remodeling  cars  owned  by  the  company  at  the 
time  of  the  taking  effect  of  this  ordinance  so  as  to  make 
them  pay-enter  cars,  shall  be  added  to  the  capital  value 
of  the  company,  as  defined  in  Sections  16  and  18  of  this 
ordinance. 

Sec.  9.  The  company  shall  place  and  continue  upon  all 
of  its  lines  cars  of  modem  design,  equipped  and  furnished 
with  such  improvements  and  appliances  as  shall  be 
deemed  by  the  city  to  be  necessary  and  proper  for  the 
safety,  convenience  and  comfort  of  the  passengers  and 
the  public,  and  shall  run  such  cars  in  such  numbers,  at 
suc^h  intervals  of  time  subject  to  the  limitation  herein- 
after provided,  and  under  such  rules  and  regulations  as 
the  city  may  from  time  to  time  require,  and  shall  cause 
such  cars  to  stop  at  such  places  as  the  city  may  designate 
for  passengers  to  leave  or  enter  the  same.  The  city  re- 
serves to  itself  the  entire  control  of  the  service,  including 
the  right  to  fix  schedules  and  routes,  including  routes 
and  terminals  of  interurban  cars,  the  character  of  the 
cars,  the  right  to  increase  or  diminish  service,  provided 
only  that  the  council  shall  not  require  service  to  an  ex- 
tent which  at  the  maximum  rate  of  fare  will  not  pro- 
duce, to  be  credited  to  the  interest  fund,  money  enough  to 
make  good  any  loss  therein  and  to  meet  the  requirements 
of  Sections  16  and  18  hereof. 

And  provided  further,  that  whenever  in  the  opinion  of 
the  company  any  resolution  or  ordinance  of  the  council 


330 

regulating  service  will,  if  such  service  be  installed  at  the 
maximum  rate  of  fare  provided  in  Section  22  hereof,  not 
produce,  to  be  credited  to  the  interest  fund,  money  enough 
to  make  good  and  meet  the  requirements  of  Sections  16 
and  18  hereof,  then  and  in  any  such  event  the  company 
shall  at  once  install  such  service  and  may  require  the 
question  whether  the  continuation  of  such  service  would, 
at  the  maximum  rate  of  fare,  impair  the  ability  of  the 
company  to  meet  the  requirements  of  Sections  16  and  18 
hereof,  to  be  submitted  to  arbitration  as  hereinafter  pro- 
vided, and  if  the  board  of  arbitration  decide  that  such 
service  will  not  produce  the  moneys  needed  as  aforesaid, 
then  tlie  resolution  or  ordinance  shall  not  be  further  com- 
plied with  by  the  company,  and  the  company  shall  have 
the  right  to  recoup  any  losses  sustained  in  the  manner 

fixed  by  the  board  of  arbitration  to  which  the  question  of 
the  continuation  of  such  service  has  been  submitted. 

Sec.  10.  Immediately  upon  thie  taking  effect  of  this 
ordinance  there  may  be  designated  by  the  city  a  City 
Street  Railroad  Commissioner,  which  designation  shall 
l3e  made  by  the  Mayor  of  the  city,  subject  to  the  approval 
of  the  City  Council.  The  city  reserves  the  right  at  any 
time  and  from  time  to  time  to  remove  the  Street  Rail- 
road Commissioner  designated  by  it,  such  removal  to  be 
by  the  mayor,  and  to  fill  the  vacancy  in  the  manner  pro- 
vided for  original  designation,  and  the  city  shall  forth- 
with, upon  the  naming  of  any  City  Street  Railroad  Com- 
missioner, notify  the  company  in  writing  of  the  name 
and  address  of  such  commissioner. 

The  City  Street  Railroad  Commissioner  shall  act  as 
the  technical  adviser  of  ttie  council  of  the  City  of  Cleve- 
land in  all  matters  affecting  the  interpretation,  meaning 
or  application  of  any  of  the  provisions  of  this  ordinance, 
and  of  action  thereunder  affecting  the  quantity  or  quality 
of  service,  or  the  cost  thereof,  or  the  rate  of  fare.     He 


331 

shall  keep  always  informed  as  to  all  mattei-s  afifecting 
the  cost  or  quality  or  quantity  of  service  furnished,  the 
receipts  and  disbursements  and  property  of  the  company, 
tJie  rate  of  fare,  the  vouchering  of  expenditures;  and  if 
he  disapproves  of  the  vouchering  of  expenditures  or  of 
the  manner  of  keeping  accounts,  or  other  matters  affect- 
ing the  bookkeeping  of  the  company,  he  shall  at  once 
take  the  matter  up  with  the  company,  and  in  case  of  dis- 
agreement the  matter  shall  at  once  be  submitted  to  the 
committee  on  standard  classification  of  accounts  of  the 
American  Street  and  Interurban  Railway  Accountants' 
Association,  or  to  such  person  or  persons  upon  whom 
the  regulation  of  such  matters  may  from  time  to  time 
be  devolved  by  law,  and  the  decision  of  such  committee 
or  person  or  persons,  not  inconsistent  with  the  provisions 
of  this  ordinance,  to  whom  this  question  is  thus  submit- 
ted, shall  be  final. 

In  the  case  of  any  temporary  absence  or  disability  of 
the  City  Street  Railroad  Commissioner,  the  mayor  may 
designate  someone  to  act  in  his  stead,  notice  being  given 
to  the  company  as  heretofore  provided. 

The  president  of  the  company,  or  in  his  absence  or 
disability,  such  other  person  as  shall  have  been  designated 
by  the  president^  and  notice  thereof  given  to  the  city, 
and  if  no  such  designation  has  been  made,  then  the  high- 
est executive  oflScer  of  the  company  in  the  order  named 
in  the  company's  by-laws,  a  copy  of  which  shall  be  fur- 
nished to  the  city  with  all  amendments  from  time  to  time 
made,  in  the  city  at  the  time  shall  represent  the  company 
in  all  matters  relating  to  the  supervision  or  performance 
of  the  duties  hereby  entrusted  to  the  commissioner. 

The  company  shall  furnish  to  the  City  Street  Railroad 
Commissioner  snitable  room  in  connection  with  the  gen- 
eral offices  of  the*  company,  and  office  furniture,  station- 
ery and   supplies.     The   City   Street  Railroad   Commis- 


382 

sioner  shall  receive  salary  at  a  rate  to  be  fixed  from  time 
to  time  by  the  council,  but  not  exceeding  $1,000  per 
month,  payable  by  the  company  and  charged  to  operating 
expenses,  and  shall  have  the  right  to  employ  such  assist- 
ants, accountants,  engineers,  clerks  and  other  employes 
as  he  shall  deem  necessary  to  enable  him  at  all  times  to 
inspect  and  audit  all  receipts,  disbursements,  vouchers, 
prices,  pay-rolls,  time-cards,  papers,  books,  documents 
and  property  of  the  company,  and  the  cost  and  expense 
of  all  such  persons  so  employed  by  the  City  Street  Kail- 
road  Commissioner,  at  salaries  fixed  by  him,  shall  he  paid 
by  the  company  monthly  upon  the  approval  of  the  said 
City  Street  Railroad  Commissioner,  provided  that  the 
aggregate  amount  thereof  in  any  one  month  shall  not 
exceed  1  per  cent  upon  the  sum  set  aside  in  that  month 
under  section  19  hereof  to  be  used  for  operating  expenses 
by  the  company,  and  the  sum  so  expended  by  the  City 
Street  Railroad  Commissioner  shall  be  subject  to  the  ap- 
proval of  the  council,  and  shall  be  deemed  a  part  of  such 
operating  expenses.  Provided  further,  that  the  sums 
authorized  to  be  expended  by  the  City  Street  Railroad 
Commissioner  under  the  provisions  of  section  28  hereof 
shall  be  in  addition  to  the  amount  in  this  section  author- 
ized to  be  so  expended,  and  Shall  be  subject  to  like  ap- 
proval of  the  council. 

Sec.  11.  Whenever  any  difference  shall  arise  with  re- 
gard to  any  of  the  provisions  of  this  ordinance  or  of  the 
rights  of  the  company  or  the  city  hereunder  between  the 
company  and  the  city,  and  the  difference  is  with  regard 
to  a  matter  which  might  lawfully  be  arbitrated  and  is 
not  herein  excluded  from  ai^bitration,  then  the  company 
or  the  city  may  require  such  question  or  questions  to  be 
submitted  to  arbitration,  such  arbitration  to  be  by  a 
board  of  arbitration  selected  in  the  following  manner: 


333 

the  company  or  the  city  demanding  arbitration  shall 
name  its  representative  upon  said  board  and  notify  the 
other  party,  together  with  notice  of  the  question  upon 
wiiicli  arbitration  is  demanded.  Within  ten  days  there- 
after the  representative  of  the  other  party  shall  be  named 
by  such  party  and  notice  of  such  selection  given,  failure 
to  do  which  shall  entitle  the  party  demanding  the  arTbi- 
tration  to  name  such  second  arbitrator.  The  two  thus 
selected  shall  within  ten  days  after  tlie  appointment  of 
the  one  last  named  select  a  third  arbitrator,  and  if  the 
two  said  parties  are  unable  within  ten  days  to  agree 
upon  such  third  ar'bitrator,  then  upon  the  application 
of  either  the  person  who  is  District  Judge  of  the  United 
States  for  the  Northern  District,  Eastern  Division  of 
Ohio,  or  such  district  as  shall  then  comprise  the  city  of 
Cleveland,  shall  have  tJie  power  to  appoint  such  third 
arbitrator,  five  days  notice  of  the  application  to  said 
District  Judge  being  given  by  the  party  applying  to  the 
other  party,  and  in  the  application  for  such  appoint- 
ment the  party  applying  shall  formulate  the  questions 
to  be  determined  by  the  board  of  arbitration.  Before 
making  a  final  appointment  pursuant  to  any  such  appli- 
cation, the  person  making  such  appointment  shall  give 
three  days'  notice  to  the  company  and  the  city  of  the 
person  or  persons  considered  by  him,  and  either  the 
city  or  the  company  may,  within  said  three  days  pre- 
sent objection  to  any  person  or  jyersons  under  consid- 
eration. When  such  third  arbitrator  shall  have  been 
appointed  a  majority  shall  have  power  to  decide  the 
questions  submitted  to  it.  Whenever  the  appointment 
of  a  board  of  arbitration  has  been  made,  as  hereinbefore 
provided',  and  questions  submitted  for  decision,  tliey 
shall  be  decided  within  thirty  days  from  the  date  of  the 
appointment  of  the  third  arbitrator,  unless  the  board  of 


334 

arbitration  unanimously  agree  to  an  extension  of  time, 
and  should  said  questions  not  be  determined  within  said 
thirty  days  and  no  such  exrt;ension  of  time  made,  then 
either  party  may  apply  to  the  person  who  is  Judge  of 
tlie  District  Court  aforesaid,  for  the  removal  of  said 
third  arbitrator,  and  the  appointment  of  a  third  arbi- 
trator in  place  of  the  one  removed  and  such  third  arbi- 
trator shall  be  appointed  as  is  herein  provided  for  the 
original  appointment  of  said  third  arbitrator. 

In  the  event  of  the  disqualification  or  refusal  to  act 
of  the  person  who  is  Judge  of  the  District  Court  of  the 
United  States,  as  hereinbefore  provided,  any  person  who 
is  Judge  of  the  Circuit  Conrt  of  the  United  States  of 
the  circuit  in  which  the  City  of  Cleveland  shall  then  be 
situated  shall  on  request,  as  hereinbefore  provided,  have 
power  to  appoint  or  to  remove  and  appoint  such  third 
arbitrator  as  is  hereinbefore  provided. 

All  expenses  of  every  kind,  incurred  by  any  board  of 
arbitration  appointed  hereunder,  including  the  fees  of 
the  arTbitrators,  shall  be  fixed  by  the  board  of  arbitration 
as  a  part  of  their  award  and  sball  be  paid  by  the  com- 
pany, and  charged  to  operating  expenses,  provided  that 
any  such  expense  in  any  period  of  six  months  above  the 
sum  of  |5,000  dollars  shall  be  paid  as  an  expense,  and 
paid  out  of  the  interest  fund. 

Wherever  herein  the  "board  of  arbitration"  is  referred 
to  or  "the  board"  it  shall  be  taken  to  include  and  mean 
any  board  of  arbitration  constituted  as  hereinbefore  pro- 
vided, and  wherever  the  "City  Street  Railroad  Commis- 
sioner" or  "The  Commissioner"  is  referred  to  it  shall 
be  taken  to  mean  and  include  the  City  Street  Railroad 
Commissioner  as  provided  in  section  10  hereof. 

"VMierever  either  in  this  section  or  elsewhere  in  this 
ordinance  notice  is  provided  to  be  given  to  the  company, 
a  notice  in  writing  addressed  to   the  president  of  the 


335 

company,  and  delivered'  at  the  offices  of  the  company, 
shall  be  delivery  of  such  notice,  and  wherever  notice  is 
provided  to  be  given  to  the  city,  such  notice  in  writing 
addressed  to  the  City  Street  Railroad  Commissioner  and 
delivered  at  the  office  provided  for  him  in  section  10 
hereof  shall  be  delivery  to  the  city. 

Sec.  12.  The  board  of  arT>itration  herein  created  shall 
have  power  to  determine  all  questions  of  every  kind, 
character  and  description  arising  Tjetween  the  city  and 
the  railway  company,  subject  to  the  limitation  contained 
in  section  11  hereof,  in  the  carrying  out  of  the  provi- 
sions of  this  ordinance,  whether  expressly  committed  to 
determination  by  arliitration  by  the  provisions  of  this 
ordinance  or  not,  when  submitted  to  such  arbitration  in 
the  manner  provided  in  Section  11  hereof,  and  the  de- 
termination in  writing  of  said  board  of  any  question 
submitted  to  them  as  aforesaid  shall  be  final  and  bind- 
ing, except  that  the  right  or  power  of  said  board  to  de- 
termine any  question  as  to  control  of  the  service  and  the 
fixing  of  schedules  and  routes  shall  be  subject  to  the 
limitations  prescribed  by  section  9  hereof. 

The  City  Street  Railroad  Commissioner  may,  pending 
the  determination  of  any  such  question  by  the  Council, 
and  to  meet  emergencies,  temporarily  approve  changes 
in  schedules  or  routes,  but  such  schedules  or  routes  so 
changed  shall  continue  in  force  only  until  the  Council 
shall  have  otherwise  directed. 

Sec.  13.  Whenever  any  board  of  arbitration  herein 
provided  for  shall  have  considered  and  determined  any 
question,  its  determination  shall  be  made  in  writing, 
and  copies  thereof  shall  forthwith  be  filed  with  the  com- 
pany and  the  city,  as  provided  for  the  delivery  of  notices 
in  section  11  hereof,  and  after  such  delivery  the  finding 
of  the  board  shall  be  binding  and  operative.  The  board 
Shall,  however,  have  the  rig'ht  in  any  finding  made  by  it 


33G 

to  fix  the  time  within  which  the  things  by  it  required 
shall  be  done. 

Sec.  14.  In  case  of  any  failure  on  the  part  of  the 
company  to  do  and  perform  fully  and  in  good  faith  any 
direction  or  award  made  by  the  board  of  arbitration,  as 
hereinbefore  provided,  the  rate  per  cent  of  interest  pay- 
ments provided  in  Section  16  hereof  upon  the  capital 
value,  other  than  bonds  and  floating  debts,  shall  be  re- 
duced! from  the  rate  then  in  force  by  such  amount  as 
the  arbitrators  may  determine,  but  not  lower  than  one 
per  cent,  below  the  rate  then  in  force,  and  shall  continue 
at  such  reduced  rate  until  in  the  opinion  of  the  board 
of  arbitration  the  said  order  and  direction  has  been  car- 
ried out  by  the  company,  and  the  board  of  arljitration 
shall  have  power  to  determine  in  every  instance  whether 
or  not  its  orders  have  been  carried  out,  and  whether 
or  not  the  reduction  in  the  return  upon  the  capital  value 
above  stipulated  shall  be  made. 

Sec.  15.  At  all  times  during  the  continuance  of  the 
rights  herein  granted,  and  any  renewal  hereof,  the  com- 
pany shall  keep  in  its  office,  open  to  inspection  at  all 
reasonable  times,  full,  true  and  accurate  accounts  of  all 
moneys  expended'  and  liabilities  incurred  in  connection 
with  said  business  and  the  maintenance  and  operation  of 
said'  property,  and  also  complete  statistical  accounts  of 
its  business  and  operations,  which  accounts  shall  be  kept 
in  the  manner  prescribed  by  the  American  Street  and 
Interurban  Railway  Accountants'  Association,  or  as  may 
be  provided  by  law  or  by  any  authority  created  by  law, 
and  the  said  company  shall  make  and  furnish  to  the  City 
Street  Railroad  Commissioner  monthly  reports  of  its  car 
mileage  and  earnings,  and  such  other  statements  and 
reports,  as  the  said  commissioner  may  from  time  to  time 
direct,  and  said  commissioner  shall  at  all  times  have  ac- 
cess to  and  full  authority  to  inspect,  examine,  audit  and 


337 

» 

verify  all  accounts,  vouchers,  documents,  books  and  prop- 
erty of  the  company  relating  to  the  receipt  and  expendi- 
ture of  money  and  the  business  done  by  the  company  in 
the  operation  of  its  railway. 

Sec.  16.  For  the  purpose  of  fixing,  from  time  to  time, 
the  rate  of  fare  to  be  charged  by  the  company,  and  the 
return  to  the  company  for  the  service  rendered  by  it  to 
the  public,  and  for  the  further  purpose  of  fixing  the 
price  at  which  the  property  of  the  company  may  be 
purchased  as  hereinbefore  provided,  the  capital  value  of 
all  of  the  property  of  said  company  shall  consist  of  the 
following  items: 

(a)  The  bonded  indebtedness  of  the  company,  the 
principal  thereof  aggregating  |8,128,000.00,  and  any  re- 
newal of  any  part,  or  the  whole  thereof,  and  any  addi- 
tions thereto  made  pursuant  to  the  provisions  of  this 
ordinance. 

(b)  The  floating  indebtdness  of  the  company  aggre- 
gating $1,288,000,  represented  by  bills  payable  as  of  Jan- 
uary 1,  1908,  less  whatever  part  thereof  has  been  paid  at 
the  time  of  the  taking  effect  hereof;  also  whatever  sum, 
if  any,  is  needed  to  be  added  to  money  on  hand  to  place 
the  sum  of  1500,000  in  the  interest  fund  as  provided  in 
Sec.  19,  also,  to  the  extent  that  there  is  no  money  on 
liand  after  deducting  from  the  cash  on  hand  said  sum 
of  1500,000,  all  existing  debts  of  The  Municipal  Traction 
Company,  The  Forest  City  Railway  Company,  The  Low 
Fare  Railway  Company,  The  Neutral  Street  Railway 
Company,  including  claims  'hereafter  liquidated;  also  in- 
cluding a  sum  equal  to  7  1-2  per  cent  upon  the  par  value 
of  all  stock  guaranteed  by  the  Municipal  Traction  Com- 
pany and  such  further  sum  not  exceeding  fifty  thousand 
dollars  ($50,000)  as  shall  be  determined,  should  equit- 
ably be  paid  to  persons  who  have  disposed  of  stock  held 
under  such  guarantee,  also  an  amount  equal  to  the  par 


338 

value  of  the  issued  and  outstanding  capital  stock  of  The 
Neutral  Street  Kailwaj'  Company;  also  all  existing  debts 
of  The  Cleveland  Kailwav  Company,  and  existing  claims 
against  said  company  hereafter  liquidated,  and  one  and 
one-half  (11-2)  per  cent  on  |14,6T5,600,  less  the  amount 
paid  by  the  Municipal  Traction  Company  to  stockholders 
of  the  Cleveland  Railway  Company,  on  or  about  October 
1,  1908,  as  for  dividend,  and  interest  at  the  rate  of  six 
(6)  per  cent  per  anrnim  from  January  1,  1910,  to  the 
taking  effect  of  this  ordinance,  upon  the  residue  of  the 
capital  value  of  the  Cleveland  Railway  Company  as  de- 
termined by  the  pro^dsions  of  paragraph  (c)  of  this  sec- 
tion to  be  divided  among  the  stockholders  of  tlie  Cleve- 
land Railway  Company;  also  all  claims  against  the  re- 
ceivers which  the  Company  may  be  required  by  order  of 
Court  to  pay;  all  of  which  shall  be  assumed,  by  the  ac- 
ceptance of  this  ordinance,  by  the  company  upon  the  tak- 
ing effect  of  this  ordinance. 

(c)  The  residue  of  the  capital  value  of  the  company 
to  wit  the  sum  of  |14,675,600,  (The  value  of  the  proper- 
ty is  agreed  to  be  |21,127,149.53  to  which  must  he  add- 
ed, as  the  value  of  The  Forest  City  property  |1,805,- 
600.00  and  there  is  added  the  sum  of  |1,158,300.00,  in- 
terest accrued,  hut  used  to  equalize  stock  value  and  not 
to  be  paid,  said  interest  being  the  equivalent  of  9  per 
cent  upon  |12,870,00O  for  the  period  ending  January  1, 
1910.  The  total  of  these  sums  is  $24,091,049.53.  From 
this  aggregate  is  deducted  bonded  indehtedness  of  |8,- 
128,000.00,  and  floating  indebtedness  as  of  January  1, 
1908,  11,288,000.00.  The  total  of  these  sums  is  $9,416,- 
000.00,  leaving  $14,675,049.53;  agreed  addition  to  equal- 
ize stock  value,  $550.47,  making  for  residue  of  capital 
value,  $14,675,600.00  with  such  additions  thereto  as  may 
from  time  to  time  be  made  pursuant  to  the  provisions 
of  this  ordinance. 


339 

The  company  may  at  any  time  refund  it«  bonds,  or 
capitalize  or  issue  mortgage  bonds  for  its  floating  debt 
as  defined  in  paragraph  (b)  provided  that  all  bonds 
hereafter  sold  by  the  company  shall  be  sold  at  the  best 
price  obtainable  therefor  and  shall  contain  a  provision 
making  them  payable  on  ninety  days  call  at  any  interest 
maturing  period  at  one  hundred  and  five  and  accrued 
interest  and  the  city  shall  have  thirty  days'  notice  in 
advance  of  all  such  proposed  sales  of  bonds  by  the  com- 
pany. 

There  shall  be  paid  out  of  the  interest  fund,  as  here- 
inafter provided,  all  taxes  and  other  payments  herein 
provided  to  be  made  therefrom  and  also,  as  return  upon 
the  Capital  value  above  described,  five  (5)  per  cent  per 
annum  upon  the  total  bonded  indebtedness  of  the  com- 
pany, payable  as  provided  by  the  mortgages  securing  the 
bonds,  and  upon  the  refunding  of  any  such  bonded  in- 
debtedness there  shall  be  paid  out  of  the  interest  fund 
that  rate  per  cent  upon  such  refunded  bonded  indebted- 
ness, not  in  excess  of  six  (6)  per  cent,  which  the  re- 
funding bonds  may  bear. 

There  shall  be  paid  out  of  the  interest  fund  as  herein- 
after provided,  from  time  to  time,  interest  at  the  rate 
of  six  (6)  per  cent  per  annum  upon  the  aggregate 
amount  of  the  debt  of  the  company  as  fixed  in  clause 
(b)  of  this  section. 

The  company  may  issue  and  sell  its  capital  stock  or 
mortgage  bonds,  said  stock  being  sold  for  not  less  than 
par,  and  said  bonds  for  not  less  than  par  except  with 
the  consent  of  the  city,  or  increase  its  floating  indebted- 
ness in  such  amounts  as  ^lall  be  necessary  to  capitalize 
the  delji  enumerated  in  said  paragraph  (b),  or  to  pro- 
vide for  such  extensions,  betterments  or  permanent  im- 
provements as  it  is  by  this  ordinance  provided  may  be 
added  to  the  capital  value  upon  which  interest  is  to  be 


340 

paid;  and  the  par  value  of  the  stocks  or  bonds  sold  or 
debt  created  for  such  purpose  shall  become  a  part  of 
the  capital  value. 

After  meeting  the  payments  heretofore  provided  for 
by  this  section,  there  shall  be  paid  from  the  remainder 
of  said  interest  fund,  to  the  stockholders,  from  the  tak- 
ing effect  of  this  ordinance,  quarterly,  a  sum  equal  to 
six  (6)  per  cent  per  annum,  payable  quarterly  upon  the 
residue  of  capital  value  and  additions  thereto  as  pro- 
vided by  paragraph    (c)    hereof. 

The  company  may,  without  the  consent  of  the  City, 
issue  and  sell  its  capital  stock  or  increase  its  bonded 
or  floating  debt;  but  no  increase  in  capital  stock  or 
bonded  or  floating  indebtedness  by  the  company  shall  be 
considered  a  part  of  the  capital  value  for  the  purposes 
of  this  section,  unless  made  pursuant  to  the  provision 
of  this  ordinance  or  with  the  consent  of  the  City. 

Sec.  17.  All  debts  of  The  Municipal  Traction  Com- 
pany, The  Forest  Cit}-  Kailway  Company,  The  Low  Fare 
Railway  Company-,  The  Neutral  Street  Railway  Com- 
pany and  The  Cleveland  Railway  Company,  including 
claims  hereafter  liquidated  and  including  all  payments 
to  be  made  as  determined  by  Section  16  hereof,  less  all. 
proper  credits  asumed  by  the  company  as  hereinbefore 
provided,  to  the  extent  that  the  same  can  be  paid  out 
of  money  on  hand  at  the  time  of  the  taking  effect  of 
this  ordinance,  after  deducting  therefrom  the  sum  of 
1500,000.00  to  be  credited  to  the  interest  fund  as  herein- 
after provided,  shall  be  so  paid. 

Sec.  18.  To  the  capital  value  of  tlie  company,  and 
as  a  part  of  the  capital  value  of  said  property,  as  that 
term  is  defined  by  the  provision  of  Section  16  hereof, 
there  shall  be  added  from  time  to  time,  the  par  value 
of  bonds  or  st-ock  sold  or  debt  created  for  extensions, 
betterments  and  permanent  improvements  as  hereinafter 


341 

provided.  All  earnings  of  the  company  from  every  source 
above  the  operating  expenses  and  maintenance,  depre- 
ciation and  renewal  allowance  shall  go  into  the  interest 
fund,  as  that  fund  is  defined  by  Section  16.  Out  of  that 
fund  shall  be  paid  the  sums  provided  to  be  so  paid  by 
Section  16.  Any  surplus  remaining  in  said  interest  fund 
after  the  payment  of  taxes  and  other  charges  provided 
by  this  ordinance  to  be  paid  therefrom,  over  and  above 
the  sum  of  $500,000.00,  shall  constitute  a  fund  to  be 
absorbed  in  the  reduction  of  fares,  and  auy  deficiency 
in  the  interest  fund  below  $500,000.00,  in  any  period  of 
operation,  shall  be  first  made  good  as  is  hereinafter  pro- 
vided, it  being  the  intent  hereof  that  the  said  interest 
fund  shall  be  maintained  at  |500,000.00,  and  that  all 
the  payments  provided  to  be  made  by  Section  16  shall 
be  cumulative  and  shall  be  first  paid  out  of  the  interest 
fund,  without  any  deductions  whatever,  and  for  that 
purpose,  ahd  out  of  the  interest  fund  the  company  shall 
pay  all  sums  assessed  against  the  company,  its  property 
or  stock,  or  against  any  income  or  interest  of  the  stock- 
holders by  reason  of  their  ownership  of  stock,  by  the 
United  States,  the  same  being  by  law  payable  by  the 
company,  or  by  the  State  of  Ohio,  or  by  any  county, 
municipal  or  Township  authorities  in  that  state.  ' 
The  proceeds  of  the  sale  of  any  property  of  the  com- 
pany represented  in  the  aggregate  capital  value  of  the 
company,  as  that  term  is  defined  in  Section  16  hereof, 
may  be  used  by  the  company  in  the  payment  of  floating 
indebtedness,  or  may  in  the  company's  discretion  or  if 
required  by  the  provisions  of  any  mortgage  made  by  the 
company  to  secure  any  bonded  indebtedness  forming  a 
part  of  said  capital  value  be  deposited  with  the  trustee 
of  such  mortgage.  All  such  sums  at  any  time  on  deposit 
with  such  trustee  shall  be  first  taken  down  and  used  by 
the  company  in  the  construction  or  acquisition  of  any 


342 

extension,  betterment  or  permanent  improvement  there- 
after made.  All  such  property  shall  he  sold  at  the  best 
obtainable  price,  and  the  amount  of  the  proceeds  and 
the  items  of  property  sold  shall  be  forthwith  reported  to 
the  council.  To  the  extent  that  any  part  of  the  proceeds 
of  such  sales  is  otherwise  used  by  the  company  than  in 
the  making  of  extensions,  betterments  and  permanent 
improvements,  or  depositing  with  such  trustees  as  above 
set  forth,  the  capital  value  of  the  company,  as  described 
in  Section  16  hereof,  shall  be  reduced. 

Sec.  19.  Upon  the  taking  effect  of  this  ordinance,  the 
company  shall,  out  of  money  on  hand,  or  as  provided  in 
Sec.  16  hereof,  place  the  sum  of  |500,000.00  less  prepaid 
accounts  and  plus  accrued  accounts  in  the  interest  fund, 
which  fund  shall  be  deposited  separately  from  the  cur- 
rent receipts  of  the  company  and  shall  from  time  to 
time  have  credited  to  it  interest  earned  thereon  by  being 
deposited  in  such  banks  as  the  company  shall  select.  All 
other  moneys  on  hand  shall  be  used  in  the  payment  of 
debts  included  in  Section  16  hereof.  To  the  interest  fund 
thus  created  there  shall  be  added  monthly  the  sum  re- 
maining after  deducting  from  the  gross  receipts  for  the 
month  eleven  and  one-half  cents  per  car  mile  for  each 
revenue  mile  exclusive  of  car  house  and  car  yard  miles, 
made  by  a  car  equipped  with  motors  operated  during 
the  month,  exclusive  of  cars  operated  to  carry  materials 
used  in  the  construction  and  repair  work  of  the  company 
itself,  and  also  sixty  (60)  per  cent  of  eleven  and  one-half 
cents  per  car  mile  for  each  revenue  mile  exclusive  of  car 
house  and  car  yard  miles  made  by  a  revenue  trailer  oper- 
ated during  the  month,  and  the  sums  provided  in  Section 
20  to  be  deducted  from  gross  receipts  for  the  maintenance, 
renewal  and  depreciation  account  and  the  fund  thus  cre- 
ated shall  be  and  constitute  the  interest  fund  out  of  which 
all  taxes,  interest  and  dividend  and  other  payments  here- 


343 

inbefore  and  hereinafter  provided  for  shall  be  made. 
Whenever  the  city  establishes  for  any  line  a  schedule 
which  requires  the  operation  of  more  cars  during  any 
hour  in  the  day  than  twice  the  number  of  cars  operated 
per  hour  on  the  base  table  for  such  line,  the  company 
shall  be  allowed  by  the  city  such  additional  car  mile  al- 
lowance for  cars  so  operated  as  shall  be  necessary  to  pay 
the  increa^d  cost  of  such  operation  in  excess  of  twice 
the  base  taible,  if  there  shall  be  any  such  increased  cost, 
and  in  the  event  of  disagreement  thereon  the  amount,  if 
any,  to  be  allowed,  shall  be  determined  by  arbitration 
in  the  manner  hereinbefore  provided. 

Sec.  20.  The  sum  provided  in  Section  19  hereof  to  be 
deducted  from  the  gross  receipts  of  the  company  per  car 
miles  of  operation  shall  be  used  by  the  company  for 
operating  expense,  insurance,  payment  of  claims  and  all 
other  expenditures,  exclusive  of  the  payments  required 
by  Section  16  hereof  to  be  made  upon  the  capital  value 
of  the  company,  and  taxes  and  interest  on  floating  debt 
and  payment  herein  provided  to  be  made  out  of  the  in- 
terest fund  and  no  part  thereof  in  excess  of  $1,000  per 
month  shall  in  any  event  be  expended  for  any  extension, 
betterment  or  permanent  improvement,  and  all  sums  so 
expended  within  the  limitation  hereinbefore  stated  for 
such  extensions,  betterments  or  permanent  improve- 
ments shall  be  reported  monthly  to  and  approved  by  the 
council  and  the  interest  fund  shall  annually  be  reimburs- 
ed for  the  full  amount  so  expended  by  new  capital,  and 
all  sums  so  expended  and  not  approved  by  the  Council 
as  for  extensions,  betterments  or  permanent  improve- 
ments shall  be  charged  to  operating  expenses.  In  addi- 
tion to  the  car  mile  operating  expense  allowance  provid- 
ed in  section  19  hereof  there  shall  in  the  following 
months  be  deducted  from  the  gross  receipts  the  follow- 
ing sums,  to  wit : 


344 

In  January,  February,  March,  April,  May  and  Decem- 
ber 4c  per  car  mile;  NovemlDer  5c  per  car  mile,  and  in 
June,  July,  August,  September  and  October  6c  per  car 
mile,  the  deductions  being  made  as  provided  in  section 
19  hereof  for  revenue  miles,  exclusive  of  car  house  and 
car  yard  miles  made  Tjy  cars  equipped  with  motors  and 
60  per  cent  of  said  rateis  for  similar  miles  made  by  trail- 
ers operated  during  said  months. 

The  sum  so  deducted  each  month  shall  'be  placed  to 
the  credit  of  the  Maintenance,  Depreciation  and  Renewal 
Account  and  shall  not  thereafter  be  expended  for  any 
other  purpose  whatever.  The  sum  so  set  aside  shall  if 
not  needed  for  immediate  maintenance  or  renewals  be 
accumulated,  and  may  from  time  to  time  be  invested  in 
the  bonds  of  the  company  or  in  the  payment  of  its  float- 
ing indebtedness,  to  the  extent  that  the  same  form  part 
of  the  capital  value  of  the  company,  as  that  term  is  de- 
fined in  Section  16  hereof,  and  to  facilitate  the  invest- 
ment of  said  fund  in  such  bonds  the  company  shall  in 
any  bonds  hereafter  issued  by  it  stipulate  the  call  price 
and  conditions  provided  in  Section  16  hereof,  but  if  the 
amount  so  invested  or  paid  is  at  any  time  needed  for 
maintenance  and  renewals  the  company  may  for  that 
purpose  issue  new  mortgage  bonds  or  incur  new  floating 
indebtedness  to  the  amount  of  such  investment  or  pay- 
ment with  the  interest  that  would  have  accrued  thereon, 
Vhich  new  bonds  or  floating  indebtedness  shall  become 
part  of  the  capital  value  of  the  company,  as  that  term  is 
defined  in  Section  16  hereof. 

Sec.  21.  The  amounts  per  car  mile  allowed  in  Sec- 
tion 19  hereof,  may  be  increased  or  decreased  from  time 
to  time  1>y  agreement  between  the  city  and  the  company 
«»o  as  to  enaJble  the  company  to  meet  the  legitimate  ex- 
penses of  operation,  insurance,  accident  and  damage 
claims,  and  to  prevent  or  make  good  any  deficit  on  ac- 


345 

count  of  sucli  operating  expenses,  and  also  the  amount 
required  by  Section  20  hereof  to  be  set  aside  for  main- 
tenance, renewals  and  repairs  may  be  similarly  increased 
or  decreased  by  agreement  and  in  the  event  of  disagree- 
ment any  such  increase  or  decrease  in  either  car  mile 
allowance  i^hall  be  submitted  to  arbitration.  Any  surplus 
in  the  hands  of  the  company  at  the  expiration  of  any 
period  of  six  (6)  months  remaining  unexpended  for  op- 
erating expenses,  as  hereinbefore  provided,  out  of  the  car 
mile  allowance  provided  by  Section  19  hereof,  exclusive 
of  the  amount  required  to  be  credited  to  the  maintenance 
and  renewal  account  by  Section  20  hereof,  shall  be  placed 
to  the  credit  of  the  interest  fund  hereinbefore  described. 

The  intent  hereof  with  regard  to  the  sum  authorized 
by  Section  20  hereof  to  be  set  aside  for  maintenance, 
depreciation  and  renewal  is  to  enable  the  company  to 
maintain,  renew,  replace,  preserve  and  keep  its  railway 
system  and  property,  and  every  part  thereof,  and  all 
extensions,  betterments  and  permanent  improvements 
hereafter  made,  pursuant  hereto,  in  good  condition, 
thorough  repair  and  working  order,  the  standard  of  sucli 
condition,  repair  and  working  order  being  an  average 
for  the  entire  system  of  70  per  cent  of  its  reproduction 
value,  and  the  car  mile  allowance  provided  by  Section 
20  hereof  for  the  purpose  of  maintenance  and  renewal 
shall  not  at  any  time  be  diminished  unless  the  value  of 
the  property  of  the  company  and  the  amount  accumu- 
lated in  the  maintenance  and  renewal  fund,  and  invested 
as  is  provided'  in  Section  20  hereof,  aggregate  more  than 
70  per  cent  of  the  reproduction  value  of  the  said  entire 
system. 

See.  22.  The  maximum  rate  of  fare  for  a  single  con- 
tinuous ride  within  the  present  limits  of  the  city  of 
Cleveland  in  one  direction,  over  any  route  of  said  com- 
pany   shall  be  four  cents   (4c)    cash  fare,  seven  tickets 


346 

for  twenty-five  cents  (25c),  one  cent  (Ic)  transfer,  no 
re'bate  and  including  said  maximum  rate  the  following 
schedule  or  scale  of  fares  is  hereby  established: 

(a)  Four  cents  cash  fares,  seven  tickets  for  twenty- 
five  cents  (25c),  one  cent  (Ic)  transfer,  no  rebate. 

(b)  Four  cents  (4c)  cash  fare,  seven  (7)  tickets  for 
twenty-five  cents  (25c),  one  cent  (Ic)  transfer,  one  cent 
(Ic)  rebate. 

(c)  Four  cents  (4c)  cash  fare,  three  (3)  tickets  for 
ten  cents   (10c),  one  cent   (Ic)    transfer,  no  rebate. 

(d)  Four  cents  (4c)  cash  fare,  three  (3)  tickets  for 
ten  cents  (10c),  one  cent  (Ic)  transfer,  one  cent  (Ic) 
rebate. 

(e)  Three  cents  (3c)  cash  fare,  one  cent  (Ic)  trans- 
fer, no  rebate. 

(f)  Three  cents  (3c)  cash  fare,  one  cent  (Ic)  trans- 
fer, one  cent  (Ic)  rebate. 

(g)  Three  cents  (3c)  cash  fare,  two  (2)  tickets  for 
five  cents   (5c),  one  cent  (Ic)   transfer,  no  rebate. 

(h)  Three  cents  (3c)  cash  fare,  tw^o  (2)  tickets  for 
five  cents  (5c),  one  cent  (Ic)  transfer,  one  cent  (Ic) 
rebate. 

(i)  Two  cents  (2c)  cash  fare,  one  cent  (Ic)  transfer, 
no  rebate. 

(j)  Two  cents  (2c)  cash  fare,  one  cent  (Ic)  trans- 
fer, one  cent  (Ic)  rebate. 

Each  of  the  foregoing  rates  of  fare,  when  in  force, 
shall  be  the  rate  of  fare  for  a  single  continuous  ride 
within  the  present  city  limits  of  the  city  of  Cleveland 
in  one  direction,  over  any  route  of  said  company  wheth- 
er enumerated  in  Section  2  hereof  or  not;  and  when  any 
of  the  foregoing  rates  of  fare  is  in  force  with  regard 
to  which  a  ticket  rate  is  provided,  the  company  shall  sell 
on  all  of  its  cars,  at  all  times  reissuable  tickets  at  the 
rate   provided,   each   of   which   tickets   shall   entitle   the 


347 

holder  to  one  such  ride.  At  all  times  any  passenger  de- 
manding a  transfer  ticket  at  the  time  of  paying  such 
cash  or  ticket  rate  of  fare  as  shall  then  be  in  force,  shall 
be  entitled  under  the  provisions  of  the  rate  of  fare  then 
in  force  as  to  transfers  to  transfer  from  the  route  on 
which  he  shall  have  paid  such  fare,  to  any  other  route 
of  said  company,  except  in  a  substantially  opposite  di- 
rection on  a  route  parallel  or  substantially  parallel 
thereto,  and  to  ride  continuously  to  any  point  upon  such 
second  route  within  the  limits  of  the  city  of  Cleveland, 
provided  the  transfer  to  a  car  upon  such  second  route 
within  five  (5)  minutes  after  leaving  the  car  upon  which 
he  shall  have  paid  fare,  or  to  the  first  car  of  such  company 
passing  such  transfer  point  upon  such  second  route,  and 
at  the  first  point  of  intersection  of  said  routes  reached  by 
the  car  upon  which  he  shall  have  paid  fare.  If  cars  upon 
two  or  more  routes  are  operated  regularly  along  the  same 
street,  passengers  who  are  able  to  reach  their  destination 
by  one  of  said  routes,  without  transfer  to  another  of  said 
routes,  shall  board  a  car  upon  the  route  reaching  such  des- 
tination, and  shall  not  he  entitled  to  transfer  thereto  from 
any  other  route. 

Any  passenger  transferring  to  a  car  upon  the  East 
55th  Street  cross  town  line  of  said  company,  or  upon 
its  cross  town  line  in  East  105th  Street,  Woodhill  Road, 
and  East  93rd  Street,  or  upon  its  cross  town  line  in  W. 
65th  Street,  shall,  upon  demand  at  the  time  of  present- 
ing, within  the  time  herein  provided,  a  transfer  ticket 
to  such  cross  town  line,  from  any  intersecting  line  of 
said  company,  be  entitled,  without  additional  charge,  to 
transfer  to  any  other  route  of  said  company  intersecting 
such  cross  town  line,  and  to  ride  to  any  point  upon  such 
intersecting  route,  provided  he  transfer  to  a  car  upon 
such  last  mentioned  route  within  five   (5)   minutes  after 


348 

leaving  such  cross  town  car,  or  to  the  first  regular  car 
upon  such  last  mentioned  route. 

The  company  shall  not  be  required,  however,  to  fur- 
nish a  round  trip  for  a  single  fare,  nor  to  carry  any 
passenger  to  any  point  upon  its  railway  and  from  such 
point  to  tlie  vicinity  of  his  starting  point  for  a  single 
fare,  and  the  company  may,  subject  to  the  approval  of 
the  city  Council  as  hereinbefore  provided,  make  such 
reasonable  regulations,  not  inconsistent  with  the  provi- 
sions of  this  ordinance,  as  may  be  necessary  to  prevent 
misuse  of  transfers. 

Any  child  under  six  (6)  years  of  age,  accompanied 
by  a  person  paying  fare,  shall  be  carried  free.  Two  per- 
sons under  six  (6)  years  of  age,  when  accompanied  by 
a  passenger  paying  fare,  shall  be  carried  for  a  single 
fare. 

The  company  may  make  and  enforce  proper  and  rea- 
sonable rules  and  regulations  relating  to  the  collection 
of  fares  and  the  issuance  and  acceptance  of  transfers 
ui>on  the  several  routes  of  the  company,  subject,  how- 
ever, to  the  approval  of  the  city  Council. 

Sec.  23.  At  once  upon  the  taking  effect  of  this  ordi- 
nance the  company  shall  put  into  operation  the  rate  of 
fare  stipulated  in  paragrah  "e"  of  Section  22  hereof,  to 
wit,  three  cent  cash  fare  and  one  cent  charge  for  a  trans- 
fer, and  said  rate  of  fare  shall  continue  in  force  for 
eight  months  from  the  taking  effect  hereof;  provided 
that  the  company  shall  have  installed  450  pay-enter  cars 
within  five  months  from  the  taking  effect  hereof,  as  is 
provided  in  Section  8  hereof;  otherwise  said  initial  rate 
of  fare  shall  continue  in  force  for  three  months  beyond 
the  completion  of  the  installation  of  said  450  pay-enter 
cars.  At  the  termination  of  said  eight  months,  or  such 
longer  period  as  may  be  rendered  necessary  by  the  fore- 
going provision,  if  the  amount  in  the  interest  fund,  less 


349 

accrued  proportionate  payments  to  be  made  therefrom, 
shall  be  less  than  Five  Hundred  Thousand  Dollars 
($500,000),  the  company  shall  install  the  next  higher 
rate  of  fare  provided  in  Section  22  hereof,  unless  in  the 
opinion  of  the  company  a  rate  of  fare  higher  than  the 
next  higher  to  the  rate  in  force  during  the  said  initial 
period  shall  be  necessary  to  restore  the  balance  in  the 
interest  fund  and  to  provide  for  current  disbursements 
tlierefrom  as  hereinbefore  provided,  in  which  event,  with 
the  consent  of  the  city,  the  company  may  install  any 
rate  of  fare  not  higher  than  the  maximum  provided  in 
Section  22  hereof;  or  upon  failure  of  the  city  to  agree 
thereto,  the  question  may  be  submitted  to  arbitration  as 
hereinTbefore  provided,  and  the  rate  of  fare  so  installed 
after  the  termination  of  said  initial  period,  whether  the 
next  higher  rate  or  any  rate  not  higher  than  the  max- 
imum installed  with  the  consent  of  the  city,  or  by  award 
of  the  board  of  arbitration,  shall  continue  in  force  for 
six  months.  Thereafter  tlie  rate  of  fare  shall  be  changed 
from  time  to  time  as  follows : 

Whenever  the  amount  credited  to  the  interest  fund, 
less  the  proportionate  accrued  payments  to  be  made 
therefrom,  shall  be  less  than  Five  Hundred  Thousand 
Dollars  (|500,000)  by  the  amount  of  |200,000  this  shall 
be  prima  facie  evidence  of  the  necessity  of  raising  the 
rate  of  fare  to  the  next  higher  rate  on  the  scale  provid- 
ed in  Section  22  hereof. 

Whenever  the  balance  in  the  interest  fund,  less  pro- 
portionate accrued  payments  to  be  made  therefrom,  shall 
be  more  than  Five  Hundred  Thousand  Dollars  (|500,- 
000)  by  the  amount  of  |20O,0OO  it  shall  be  prima  facie 
evidence  of  the  necessity  of  lowering  the  rate  of  fare  to 
the  next  lower  rate  on  the  scale  provided  in  Section  22 
hereof. 


350 

If  at  any  time,  either  the  city  or  the  company  shall 
be  of  opinion  that  the  fare  should  be  increased  or  de- 
creased otherwise  than  as  is  hereinbefore  provided,  such 
party  may  give  written  notice  to  the  other  of  its  opinion, 
stating  the  increase  or  decrease  desired.  If  this  is  assent- 
ed to,  the  change  shall  be  made.  In  case  of  disagreement, 
the  question  of  increase  or  decrease,  and  the  rate  to  be 
fixed  shall  at  once  be  sut)mitted  to  arbitration,  as  is  pro- 
vided in  Section  11  hereof,  and  the  rate  fixed  by  the 
award  of  such  board  of  arbitration,  not  exceeding  the 
maximum  rate  of  fare  provided  for  by  this  ordinance, 
shall  be  at  once  installed. 

Wherever  in  this  section  or  in  this  ordinance  it  is  pro- 
vided that  in  determining  the  amount  in  the  Interest 
Fund  deductions  shall  be  made  for  "accrued  proportion- 
ate payments  to  be  made  therefrom,"  such  deductions 
shall  be  made  as  follows: 

The  total  amount  to  be  deducted  during  the  year  shall 
be  the  aggregate  amount  of  interest  and  dividend  pay- 
ments provided  by  section  16  hereof  together  with  all 
taxes,  and  the  said  aggregate  shall  be  deducted  at  the 
following  rates : 

For  January — Seven  per  cent. 

For  February — Six  per  cent. 

For  March — Seven  per  cent. 

For  April — Eight  per  cent. 

For  May — Nine  per  cent. 

For  June — Nine  per  cent. 

For  July — Ten  per  cent. 

For  August — Ten  per  cent 

For  September — Nine  per  cent. 

For  OctoTjer — Nine  per  cent. 

For  November — Eight  per  cent. 

For  December — Eight  per  cent. 


351 

Sec.  24.  The  compaBy  may  transport  along  and  upon 
its  lines  in  suitable  cars  such  materials,  supplies,  appli- 
ances and  tools  as  it  may  need  for  the  construction, 
maintenance  and  operation  of  its  road.  It  may  carry 
upon  its  passenger  cars  or  upon  other  cars  mail  for  the 
government  of  the  United  States,  It  may  operate  funeral 
cars,  observation  cars,  express  passenger  service  and 
other  special  cars  at  rates  to  be  fixed  from  time  to  time 
by  the  Council  of  tlie  city  of  Cleveland  not  lower  than 
the  rate  in  force  for  the  carriage  of  passengers  from 
time  to  time  as  is  provided'  by  the  terms  of  this  ordi- 
nance. The  Company  shall  also  operate  hospital  and  sup- 
ply cars  for  the  city,  and  such  other  cars  for  exclusively 
municipal  purposes  as  the  city  shall  direct,  and  the  city 
shall  furnish  and  maintain  such  cars  and  shall  pay  the 
cost  of  operating  such  cars,  to  wit,  the  wages  of  all  em- 
ployes of  the  Company  in  charge  thereof,  plus  the  cost 
of  current,  but  exclusive  of  any  contribution  for  fixed 
charges  or  for  track  maintenance  or  renewal.  The  trans- 
portation of  materials,  supplies,  appliances,  tools,  and 
mail  and  the  oi>eration  of  special  cars  shall  not  be  per- 
mitted to  interfere  with  or  delay  the  carriage  of  pas- 
sengers and  shall  at  all  times  be  subject  to  regulation 
by  the  Council.  The  car  miles  operated  by  the  company 
in  transportation  of  city  cars,  materials,  supplies,  ap- 
pliances and  tools  shall  not  be  counted  in  the  car  miles 
made  for  the  purposes  of  Sections  19  and  20  hereof. 

Sec.  25.  The  cars  of  the  company  shall  be  operated 
to  Garfield  Park  on  its  Broadway  line,  and  passengers 
shall  be  carried  to  and  from  said  point  at  the  same  rate 
of  fare  charged  under  the  provision  of  this  ordinance  by 
the  Company  upon  its  lines  within  the  limits  of  the  City 
of  Cleveland.  By  the  acceptance  of  this  ordinance  as 
hereinafter  provided,  the  Company  agrees  to  accept  an 
ordinance  authorizing  it  to  extend  its  Lorain  Street  line 


352 

to  the  present  limits  of  the  City  of  Cleveland,  consents 
of  property  owners  having  been  presented,  for  the  pas- 
sage of  such  an  ordinance,  and  immediately  thereafter 
to  construct  and  extend  its  Lorain  Street  line  to  said 
city  limits,  and  to  operate  said  line  to  the  present  limits 
of  the  City  of  Cleveland  at  the  rate  of  fare  from  time 
to  time  in  force  under  the  provisions  of  this  ordinance 
within  the  limits  of  the  Citj  of  Cleveland.  Provided,  that 
in  lieu  of  accepting  such  ordinance  and  building  such 
extension,  the  Company  shall  have  the  right,  with  the 
consent  of  the  city,  to  make  any  reasonable  arrangement 
for  the  operation  of  its  cars  to  the  city  limits  on  Lorain 
Street,  over  existing  tracks  therein. 

Sec.  26.  The  salaries  of  persons  employed  by  the 
Company  and  receiving  compensation  at  the  rate  of  |1,- 
500  per  annum  or  more  shall  not  be  in  excess  of  those 
paid  for  similar  work  by  other  properties  of  the  same 
relative  size. 

Sec.  27.  The  words  "extensions,  betterments  and  per- 
manent improvements"  as  used  in  this  ordinance,  in  con- 
tradistinction from  repairs,  maintenance,  renewals  and 
replacements  of  property,  shall  be  held  to  mean  the  ac- 
quisition, construction  and  equipment  of  additional  lines 
of  street  railway,  power  houses,  switches,  sidings,  car 
houses,  shops,  rolling  stock,  machinery  and  other  prop- 
erty or  additions  to  existing  equipment  or  difference  be- 
tween cost  of  new  sources  of  power,  or  new  methods  of 
propulsion  and  the  cost  of  the  source  of  power  or  method 
of  propulsion  replaced,  if  new  at  the  time  of  replace- 
ment, and  all  expenses  incident  to  such  construction  and 
acquisition,  and  also  wherever  any  property  of  the  com- 
pany is  replaced  by  other  property  at  a  greater  cost  than 
would  he  the  first  cost  of  such  property,  if  purchased  at 
the  time  of  replacement,  then  such  excess  cost  shall  be 
deemed  an  extension,  betterment  or  permanent  improve- 


353 

ment  within  the  meaning  of  those  words  as  used  in  this 
ordinance,  and  in  the  event  of  any  disagreement  between 
the  company  and  the  city  with  regard  thereto  a  board 
of  arbitration  selected  as  provided  in  Section  11  hereof 
shall  have  power  to  determine  under  the  provisions  of 
this  section  what  proposed  expenditures  by  the  company 
are  for  extensions,  betterments  and  permanent  improve- 
ments. 

Sec.  28.  Whenever  any  extensions,  betterment  or  per- 
manent improvement  is  proposed  by  the  company  other- 
wise than  of  the  kind  and  subject  to  the  limitations  con- 
tained in  Section  20  hereof,  estimates  of  the  cost  thereof 
and  plans  and  specifications  therefor,  shall  be  filed  with 
the  City  of  Cleveland  by  the  company. 

When  such  extensions,  betterments  or  permanent  im- 
provements have  been  approved  by  the  Council  such  ex- 
tensions, betterments  and  permanent  improvements  shall 
be  made.  If  the  company  acting  in  good  faith  and  using 
all  usual  means  can  procure  the  necessary  money  by  the 
sale  of  stocks  or  bonds  at  par,  or  'by  an  increase  of  float- 
ing debt,  and  the  capital  value,  as  that  term  is  defined 
by  Section  16  hereof,  shall  be  increased  as  provided  in 
Section  16  hereof,  and  the  company  shall  be  entitled  to 
have  payments  made  to  it  thereon  out  of  the  interest 
fund  at  the  rate  of  six  (6)  per  cent  per  annum,  payable 
quarterly,  if  the  expense  is  met  by  the  issuance  of  stock, 
or  at  the  rate  of  interest  borne  by  the  bonds  or  floating 
debt  if  the  expense  is  met  by  bond  issue,  or  increased 
floating  debt,  at  a  rate  not  exceeding  that  hereinbefore 
provided. 

Whenever  such  extension,  betterment  or  permanent 
improvement  is  proposed,  the  City  Street  Railroad  Com- 
missioner shall  have  the  right  to  employ  such  assistance 
as  he  shall  deem  necessary  for  the  purpose  of  checking 


354 

over  such  estimates;  and  if  the  work  of  constructing 
such  extensions,  betterments  or  permanent  improv- 
ements is  undertaken,  he  shall  have  the  right  to  emploj- 
such  assistance  as  he  shall  deem  necessary  for  the  pur- 
pose of  checking  material,  labor  or  other  costs  in  the 
supplying  of  such  extensions,  betterments  or  permanent 
improvements,  and  the  company  shall  pay  all  bills  for 
such  assistance  and  services  approved  by  the  City  Street 
Railroad  Commissioner,  provided  that  such  bills  shall 
be  subject  to  the  approval  of  the  city  Council,  and  shall 
not  in  the  aggregate  exceed  one  (1)  per  cent  of  the  cost 
of  the  proposed  extensions,  betterments  or  permanent 
improvements,  which  sum,  if  the  extension,  betterment 
or  permanent  improvement  is  made,  shall  be  included  in 
the  actual  cost  thereof;  or,  if  the  extension,  'betterment 
or  permanent  improvement  is  not  made,  the  cost  thereof, 
not  exceeding  one  (1)  per  cent  of  the  estimated  cost 
thereof,  shall  be  paid  by  the  company  as  an  expense  out 
of  the  interest  fund. 

Sec.  29.  The  company  alone  may  propose  extensions, 
betterments  or  permanent  improvements. 

Nothing  shall  be  added  to  the  capital  value  provided 
in  Section  16  hereof  on  account  of  any  extension,  better- 
ment or  permanent  improvement  made  by  the  company 
without  the  approval  of  the  city. 

Sec.  30.  During  the  continuance  of  this  grant  the 
company  may  maintain  the  existing  suburban  lines  op- 
erated by  it  at  the  time  of  the  passage  hereof,  but  the 
cost  of  the  construction  of  extensions,  betterments  and 
improvements  upon  existing  suburban  lines  except  to 
the  extent  of  the  increased  cost  of  replacing  property 
as  defined  in  Section  27  hereof,  or  of  the  building  and 
construction  of  additional  suburban  lines  shall  not  be 
included  in  the  capital  value  of  the  company  as  fixed  by 
Section  16  hereof  without  tbe  consent  of  the  city,  which 


355 

consent  shall  be  secured  in  the  manner  provided  in  Sec- 
tion 28  hereof  for  the  making  of  extensions,  betterments 
or  permanent  improvements  upon  the  property  of  the 
company  within  the  city. 

The  company  shall  perform  all  existing  contracts  be- 
tween it  and  any  municipal  corporations,  or  boards  of 
county  commissioners  under  which  suburban  lines  are 
now  operated,  but  shall  not  increase  the  service  above 
or  reduce  the  fare  below  the  requirements  of  such  ex- 
isting contracts,  and  in  the  event  of  any  dispute  between 
the  city  and  the  company  as  to  the  requirements  of  such 
existing  contracts,  the  dispute  shall  be  submitted  to  ar- 
bitration, if  the  consent  of  the  municipal  corporation  or 
other  public  authority  interested  can  be  obtained.  In  the 
event  of  such  arbitration  the  city  shall  appoint  one  arbi- 
trator and  the  suburban  authority  one  arbitrator;  the 
third  shall  be  appointed  as  provided  in  Section  11  here- 
of. Otherwise  such  dispute  shall  be  litigated  and  the  city 
shall  have  the  right  to  be  represented  by  counsel. 

The  company  may  accept  new  grants  for  the  operation 
of  suburban  lines,  or  renewals  of  existing  grants,  but 
after  the  acceptance  of  such  grants  or  renewal  of  exist- 
ing grants,  the  amount  deducted  from  the  gross  receipts 
of  the  company  for  car  miles  made  in  the  operation  of 
such  new  or  renewal  grant,  under  the  provisions  of  Sec- 
tions 19  and  20  hereof,  shall  in  no  event  exceed  the  gross 
receipts  made  in  such  operation  of  such  new  or  renewal 
grant,  less  the  distributive  share  of  the  aggregate  taxes 
of  the  company,  which  should  be  paid  upon  the  property 
operated  under  such  new  or  renewal  grant,  and  the  car 
mileage  allowance  for  expense  of  operation  and  mainten- 
ance within  the  city  provided  by  Sections  19  and  20  here- 
of shall  not  be  increased  on  account  of  any  deficiency 
therein.  The  gross  receipts  of  operation  of  any  such  new 
or  renewed  suburban  grant  shall   be  the  excess  of  the 


356 

total  receipts  of  the  line  above  the  full  city  rate  for  all 
passengers  using  any  part  of  tJie  line  within  the  city 
limits.  But  should  later  operation  under  such  new  grants 
or  renewal  grants  show  a  surplus  of  gross  receipts  of  the 
company  for  car  miles  made  in  the  operation  of  such  new 
or  renewal  grant  over  the  deduction  from  gross  receipts 
authorized  to  be  made  under  the  provisions  of  this  ordi- 
nance, the  company  may  use  this  surplus  to  reimburse 
itself  for  any  earlier  deficiency,  and  when  this  has  been 
accomplished  the  subsequent  receipts  shall  be  used  as 
provided  in  this  ordinance,  and  if  the  Council  approve, 
the  capital  value  of  the  Company  shall  be  increased  by 
the  then  value  of  the  property  used  in  any  such  exten- 
sions, betterments,  or  permanent  improvements  which 
have  been  so  constructed. 

The  right  so  to  include  such  property  in  capital  value 
and  the  amount  to  be  so  included  shall  be  determined  by 
agreement  between  the  city  and  the  company,  and  shall 
not  be  subject  to  arbitration. 

Sec.  31.  During  the  continuance  of  this  grant  the 
company  shall  carry  on  its  cars,  free  of  charge,  all  po- 
licemen and  firemen  of  the  city  of  Cleveland,  in  uniform 
and  on  duty,  but  shall  otherwise  give  no  free  passes  or 
free  transportation  unless  otherwise  required  by  law 
except  to  motormen,  conductors  and  inspectors  of  the 
company,  in  uniform,  and  the  company  shall  have  the 
right  to  furnish  to  its  other  employes,  except  employes 
in  the  general  oflSce,  free  transportation  while  on  duty 
or  going  to  or  returning  from  work  the  cost  of  the  same 
to  be  charged  to  operation.  The  company  shall,  by  the 
adoption  of  all  reasonable  protective  measures,  and  by 
necessary  supervision  of  its  employes  and  accounting 
force  provide  for  the  collecting  of  fares  due  the  company 
from  passengers.  If  at  any  time  the  City  Street  Rail- 
road   Commissioner    notifies    the    company    that    in    his 


357 

judgment  any  laxity,  carelessness  or  inefficiency  exists 
in  tlie  matter  of  collecting  the  revenue  of  the  company, 
or  of  permitting  free  transportation  in  any  way,  or  any 
wastefulness  in  the  purchase  of  material,  or  employment 
of  persons,  or  their  compensation,  said  commissioner 
shall  have  the  right  to  employ  such  assistance  as  he  may 
need  to  determine  the  facts,  and  the  company  shall  pay 
the  cost  of  all  such  assistance,  subject  to  the  limitations 
imposed  hy  section  10  hereof.  If,  as  the  result  of  sucli 
investigation,  it  is  found  that  any  such  failure  to  collect 
revenues  exists,  it  shall  "be  at  once  corrected.  If  there  be 
disagreement  between  the  city  and  the  company  as  to 
the  result  of  such  investigation  or  as  to  the  efficiency 
of  any  corrective  applied  by  the  company,  and  the  ques- 
tion having  been  submitted  to  arl)itration  under  the  pro- 
visions of  Section  11  hereof,  such  board  finds  such  fail- 
ure to  exist,  or  not  to  have  been  corrected,  the  reduction 
in  the  rate  per  cent  of  interest  payments,  as  provided  in 
Section  14  hereof,  may  be  made  and  enforced  by  the  board 
of  arbitration  until  the  failure  is  corrected. 

Sec.  32.  The  company,  by  the  acceptance  of  this  ordi- 
nance, agrees  to  grant  to  the  city  and  the  city  hereby  re- 
serves to  itself  the  right  whenever  the  city  shall  have 
legal  power  so  to  do,  upon  giving  at  least  six  (6) 
months'  previous  notice  in  writing  of  its  intention  so 
to  do,  to  purchase  and  take  over  the  entire  street  rail- 
way system  of  the  company,  including  all  property  then 
existing  which  now  constitutes  the  street  railway  system 
in  the  possession  of  and  operated  by  The  Cleveland  Rail- 
way Company,  with  all  renewals,  improvements,  better- 
ments and  repairs  thereon,  and  additions  thereto,  and 
including  all  the  property,  grants,  franchises,  rights  and 
claims  of  every  kind,  character  and  description  then 
owned  by  said  company.  In  case  the  city  shall  purchase 
and  take  over  the  street  railway  property  of  the  com- 


358 

pany,  as  is  in  this  ordinance,  provided,  then  it  shall  pay 
for  the  same  the  capital  value  of  said  property,  as  fixed 
by  Section  16  hereof,  plus  10  per  cent  thereof,  the  city 
at  the  time  of  such  purchase  assuming  and  agreeing  to 
pay  in  addition  thereto  all  the  obligations,  indebtedness 
and  liabilities  of  said  company,  and  all  liens  other  than 
bonded  indebtedness  upon  its  property  then  existing, 
which  bonded  indebtedness  the  city  shall,  at  the  time  of 
any  such  purchase  provide  for  by  assumption  if  the  law- 
authorizing  such  purchase  permits  or  by  payment  if 
the  law  so  authorizes  at  the  time,  and  under  the  pro- 
visions of  the  bonds  they  are  callable  or  by  taking  the 
property  subject  thereto,  if  that  be  the  mode  provided 
by  law  for  dealing  with  such  existing  bonded  indebted- 
ness in  making  such  purchase.  To  the  extent  that  the 
city  takes  the  property  subject  to,  assumes  or  pays  either 
floating  or  bonded  indebtedness  the  amount  thereof  shall 
be  deducted  from  capital  value  before  the  addition  of  the 
10  per  cent  hereinbefore  provided  in  determining  the 
price  to  be  paid  by  the  city.  Upon  giving  such  notice  in 
writing  to  the  company  by  the  city,  as  is  provided  in 
Section  32  hereof,  the  law  then  permitting  such  pur- 
chase, of  the  exercise  of  the  option  to  purchase  herein 
given,  the  company  shall,  and  hereby  agrees  that  it  will 
as  soon  thereafter  as  the  law  will  permit,  execute  and 
deliver  to  tlie  city  a  good  and  sufficient  deed,  conveyance 
and  assignment,  conveying  a  good  marketable  title  to 
said  railways,  grants,  property  and  franchises  then  held, 
including  cash  on  hand  and  in  the  interest  fund,  less 
enough  to  pay  dividends  at  the  rate  of  6  per  cent  to  date, 
subject,  however,  tx>  all  existing  liens,  indebtedness,  ob- 
ligations and  liabilities  of  said  company,  and  upon  the 
delivery  of  said  deed,  conveyances  and  assignment,  the 
city  shall  pay  said  purchase  price  as  hereinbefore  pro- 


359 

vided  and  execute  all  papers  necessary  to  carry  into  ef- 
fect the  terms  of  such  purchase. 

The  company  agrees  that  to  the  extent  that  its  cur- 
rent obligations,  indebtedness  and  liabilities  then  liqui- 
dated, except  for  extensions,  betterments  and  permanent 
improvements  made  in  accordance  with  the  terms  of  this 
ordinance,  do  at  the  time  of  any  such  purchase  exceed 
a  sum  equal  to  ten  per  cent  (10  per  cent)  of  the  gross 
receipts  of  the  company  from  all  sources  for  the  next 
preceding  calendar  year  such  excess  shall  be  deducted 
from  the  capital  value  in  determining  the  price  to  be 
paid  by  the  city. 

Sec.  33.  The  company,  by  the  acceptance  of  this  or- 
dinance, does  grant  to  the  city,  and  the  city  hereby  re- 
serves to  itself  the  right  from  and  after  the  1st  day  of 
January,  1918,  to  designate  any  firm,  person  or  corpor- 
ation having  lawful  authority  to  acquire,  own  and  op- 
erate street  railways  in  the  City  of  Cleveland  (herein 
called  the  licensee)  who  or  which  shall  have  the  right 
to  purchase  the  street  railway  system,  property  and 
rights  of  the  company  in  the  same  manner  as  the  city 
hereunder  has  the  right  to  purchase  the  same,  subject 
to  the  conditions  that  the  licensee  agrees  to  accept  a 
smaller  return  by  at  least  one-quarter  of  one  per  cent 
upon  the  portion  of  capital  value  described  in  Paragraph 
(c)  of  Section  16  hereof  than  the  company  is  then  en- 
titled to  receive,  and  shall  purchase  the  same  property 
which  the  city  has  herein  reserved  the  right  to  purchase 
in  Section  32  hereof;  that  the  price  to  be  paid  therefor 
by  the  said  licensee  shall  be  the  price  at  which  it  is  pro- 
vided in  Section  32  hereof  that  the  city  may  acquire  the 
property,  and  that  in  so  acquiring  the  property,  said 
licensee  shall  agree  to  hold  the  same,  subject  to  all  the 
terms  of  this  ordinance,  including  as  a  valid  and  bind- 
ing condition  the  right  of  the  city  to  purchase  the  same 


360 

as  hereinbefore  provided,  and  the  right  of  the  city  there- 
after to  designate  any  other  licensee  to  acquire  and  hold 
the  same,  as  is  hereinbefore  provided,  and  upon  the  des- 
ignation of  any  such  licensee  by  the  city,  the  same  notice 
shall  be  given  to  the  company  as  is  herein  provided  to  be 
given  in  the  event  of  the  city  exercising  the  option  re- 
ferred to  in  Section  32  hereof,  and  the  same  mode  of 
transfer  as  is  herein  provided  in  case  of  purchase  by  the 
city  shall  apply  to  the  case  of  purchase  by  such  licensee. 
The  right  of  the  licensee  of  the  city  to  acquire  the  street 
railway  system,  rights  and  property  by  purchase,  under 
the  provisions  of  this  ordinance,  shall  in  no  way  be  im- 
paired by  any  lack  of  power  or  authority  on  the  part  of 
the  city  itself  to  acquire  the  said  street  railway  system, 
rights  and  property,  for  municipal  operation  and  use,  or 
otherwise. 

Before  any  such  licensee  as  is  herein  provided  shall 
be  designated,  the  city  shall  fix  a  time  for  the  receipt  of 
bids  and  shall  give  thirty  days'  public  notice  thereof.  At 
the  time  appointed  proposals  shall  be  filed,  the  proposal 
of  any  applicant  other  than  the  company  being  accom- 
panied by  150,000.00  in  money  as  a  guarantee  of  its 
good  faith.  If  no  proposal  is  filed  by  the  company  it  shall 
be  deemed  to  propose  the  rate  of  return  then  authorized. 
Should  the  company  file  a  proposal  lower  than  its  then 
authorized  rate,  such  proposal  being  as  low  as  any  other 
filed,  the  same  shall  be  accepted  and  the  rate  therein 
offered  shall  become  the  authorized  rate  of  the  return 
unless  (1)  no  other  proposal  be  filed,  or,  (2)  another 
proposal  having  been  filed  and  a  license  designated,  no 
purchase  is  made  by  such  licensee  thereunder,  in  either 
of  which  events  the  proposal  of  the  company  shall  be  dis- 
regarded and  no  change  in  the  rate  of  return  shall  be 
required  by  reason  thereof.  All  proposals  received  shall 
be  opened  at  the  hour  fixed,  and  thereafter  the  council 


361 

may  designate  as  licensee  any  bidder  whose  proposal  is 
in  accordance  with  the  conditions  hereinbefore  set  forth. 
Should  the  city  determine  not  to  designate  »uch  licensee 
or  should  no  proposal  complying  with  the  conditions 
hereinbefore  provided  be  received,  the  city  shall  not  again 
give  notice  of  the  receipt  of  proposals  within  six  months 
thereafter.  Should  the  city  designate  such  licensee  and 
the  bidder  so  designated  fail  to  acquire  the  property  and 
to  comply  with  all  the  conditions  of  such  acquisition  as 
stipulated  by  this  ordinance  within  thirty  days  after  the 
expiration  of  the  six  months  notice  hereinbefore  provided, 
unless  prevented  by  bona  fide  legal  proceedings  over 
which  he  has  no  control,  the  city  shall  declare  such  fail- 
ure by  resolution  of  council  and  upon  the  passage  of  such 
resolution  the  city  shall  out  of  the  $50,000.00  deposited 
by  such  defaulting  bidder  pay  to  the  company  any  loss 
or  expense  which,  in  the  opinion  of  the  council,  has  been 
incurred  *by  the  company  in  regard  to  the  filing  of  pro- 
posals or  bids,  and  the  balance  of  such  deposit  shall  be- 
come the  property  of  the  city  and  shall  be  deposited  in 
the  city  treasury  to  the  credit  of  the  general  fund. 

Sec.  34.  Any  such  licensee  in  the  acquisition  of  the 
property  under  the  provisions  of  section  33  hereof  shall 
pay  the  capital  value  of  said  property  as  fixed  by  section 
16  hereof  less  bonded  or  floating  debts  paid  or  assumed 
plus  10  per  cent  of  the  difference,  and  shall  be  under  all 
the  obligations  provided  in  section  32  hereof  for  the  city, 
in  the  event  of  purchase  by  the  city,  except  the  limita- 
tions as  to  the  mode  of  payment,  and  shall  assume  and 
agree  to  pay,  in  addition  to  the  price  stipulated,  all  the 
obligations,  indebtedness  and  liabilities  of  the  company, 
and  all  liens  upon  its  property  then  existing  other  than 
bonded  indebtedness,  which  said  bonded  indebtededness 
the  said  licensee  may  assume,  it  being  understood  that 
the  current  obligations,  indebtedness  and  liability  of  the 


362 

company  shall  be  limited  as  provided  in  section  32  here- 
of, and  that  any  excess  thereof  shall  be  deducted  from 
said  purchase  price. 

Sec.  35.  If  at  the  time  of  the  expiration  of  this  grant 
the  city  shall  not  have  exercised  the  right  reserved  to  it 
to  purchase  the  said  property  or  to  nominate  a  purchaser 
therefor,  as  is  provided  in  sections  32  and  33  hereof,  then, 
and  in  either  event  the  city  reserves  the  right,  provided 
it  then  has  the  power  so  to  do,  to  purchase  said  street 
railroad,  with  all  additions  and  extensions  within  the 
then  city  limits,  for  such  price  and  upon  such  terms  as 
n^ay  be  agreed  upon  between  the  city  and  the  company, 
or  upon  their  failure  to  agree,  then  for  such  price  and 
upon  such  terms  as  may  be  fixed  by  a  board  of  arbitra- 
tion, consisting  of  three  persons,  a  majority  of  whom 
shall  decide  all  questions. 

In  case  of  arbitration  in  the  purchase  of  said  street 
railroad,  the  city  shall  give  written  notice  of  its  inten- 
tion so  to  arbitrate,  and  name  therein  one  arbitrator, 
said  notice  being  given  not  more  than  eighteen  (18) 
months,  nor  less  than  twelve  (12)  months  prior  to  the 
termination  of  this  grant.  The  company  shall  name  in 
writing,  within  ten  (10)  days  after  receiving  such  notice 
one  arbitrator;  the  two  within  ten  (10)  days  thereafter 
shall  agree  upon  a  third  arbitrator,  or  on  failure  of  the 
company  so  to  name  an  arbitrator,  or  the  two  arbitra- 
tors to  name  the  third,  within  the  times  herein  specified 
the  third  arbitrator  shall  be  appointed  as  provided  in 
section  11  hereof. 

Sec.  36.  The  price  which  the  city  shall  pay  for  such 
street  railroad  under  the  provisions  of  section  35  hereof 
shall  be  its  value  for  street  railroad  purposes,  and  shall 
be  obtained  as  follows:  The  cost  of  reproduction  shall 
be  estimated,  and  from  this  shall  be  deducted  a  reason- 
able amount  for  depreciation.  All  the  physical  property 
of  every  nature  within  the  then  city  limits  used  in  the 


363 

operation  of  the  railroad  shall  be  included  in  the  valu- 
ation. Separate  itemized  schedules,  with  values,  shall 
be  made  under  the  following  titles  : 

1 — Land.  2 — Power  plant,  including  land,  building 
and  machinery.  3 — All  other  buildings.  4 — Tracks,  in- 
cluding poles,  wires  and  appurtenances  and  also  includ- 
ing pavement  to  the  extent  paid  for  by  the  company  and 
included  in  capital  value  subsequent  to  the  passage  of 
this  ordinance.    5 — Rolling  stock.    6 — Miscellaneous. 

To  the  total  valuation  of  the  above  items,  if  the  city 
shall  exercise  its  right  and  purchase  the  property  under 
this  section,  ten  (10)  per  cent  shall  be  added.  But  in 
arriving  at  said  valuation  no  franchise  or  privileges 
granted  by  the  city  shall  be  estimated  or  paid  for  nor 
shall  any  payment  be  made  for  the  amount  in  the  in- 
terest fund  Tvhich  shall  then  become  the  property  of  the 
city  of  Cleveland.  The  city  reserves  the  right  to  decline 
to  take  the  property  at  the  valuation  fixed  by  arbitration, 
as  above  provided. 

Sec.  37.  If,  at  the  expiration  of  this  franchise,  no  ex- 
tension or  renewal  thereof  is  granted  by  the  city,  and  the 
city  does  not  then  purchase  the  property,  any  person  or 
persons  to  whom  a  franchise  may  be  granted  to  operate 
a  railroad  over  the  then  existing  lines  or  any  of  them 
or  any  part  of  them  shall  have  the  right  and  be  under 
obligation  to  purchase  said  railroad  or  such  portion 
thereof  from  its  then  owner  upon  the  terms  herein  pro- 
vided for  purchase  by  the  city  by  Sections  35  and  36 
hereof. 

Sec.  38.  The  company  stall  pay  to  the  city  three 
thousand  dollars  (|3,000.00)  per  year  for  the  use  of  the 
city's  tracks  and  appliances  on  the  bridges,  viaducts  and 
elsewhere  the  use  of  which  is  authorized  in  section  2 
hereof,  in  the  city,  and  shall  renew,  maintain  and  keep 
said  tracks  and  appliances  in  constant  repair.     The  city 


364 

reserves  the  right,  however,  from  time  to  time  to  adjust 
and  fix  the  sum  to  be  paid  by  the  company  for  the  uses 
herein  provided  by  ordinance  of  the  council,  the  sum  so 
to  be  fixed,  however,  not  to  exceed  at  any  time  an  amount 
equal  to  six  (6)  per  cent  per  annum  upon  the  cost  of  the 
tracks  and  appliances  belonging  to  the  city  so  used; 
and  imposing  and  continuing  upon  the  company  th«  obli- 
gation of  renewal,  maintenance  and  repair  above  pro- 
vided. Should  the  city  at  any  time  grant  to  any  other 
company  the  right  jointly  to  use  any  of  its  tracks  covered 
by  this  section,  the  payments  to  be  made  to  the  city  for 
such  use  by  the  grantee  herein  and  such  other  company 
or  companies,  shall  be  apportioned  by  the  city  as  the 
council  shall  deem  just,  the  aggregate  sums  paid  not  ex- 
ceeding the  maximum  hereinbefore  provided  to  be  paid 
by  the  company. 

Sec.  39.  Nothing  in  this  ordinance  contained  shall 
operate  as  an  abridgment  of  the  corporate  rights  or 
powers  of  the  company,  nor  of  the  discretion  of  its  board 
of  directors  in  the  selection  of  managers  and  employes  or 
any  one  performing  any  duties  imposed  upon  the  com- 
pany and  its  officers  by  law,  nor  shall  anything  herein  con- 
tained by  deemed  a  limitation  upon  the  amount  of  capital 
stock  which  shall  be  issued  by  the  company  or  indebtedness 
incurred  by  it.  The  capital  valuation  fixed  by  section  16 
hereof  is  for  the  sole  purpose  of  determining  the  return 
to  the  company  from  the  carriage  of  passengers  and  for 
the  purpose  of  fixing  from  time  to  time  the  rate  of  fare 
and  the  price  at  which  the  purchase  of  the  property  of 
the  company  may  be  made. 

Sec.  40.  The  company  shall  have  the  right,  whenever 
the  unexpired  term  of  its  franchises  within  the  limits  of 
the  city  of  Cleveland,  shall  be  less  than  fifteen  years,  to 
fix,  charge  and  collect  the  maximum  rate  of  fare  pro- 
vided in  section  22  hereof,  and  during  said  period  the 


365 

right  to  control  the  schedule  for  the  operation  of  cars 
shall  be  in  the  company,  and  not  in  the  city,  except  that 
the  city  shall  not  be  deemed  to  have  surrendered  its  police 
power  to  require  such  proper  and  reasonable  service  as 
may  be  required  by  the  needs  of  the  traveling  public.  Dur- 
ing such  fifteen  years,  or  any  portion  thereof,  the  company 
shall  continue  to  receive  the  sums  provided  by  section 
16  hereof  out  of  the  interest  fund,  and  whenever  the 
amount  credit-ed  to  the  interest  fund,  less  the  propor- 
tionate accrued  payments  to  be  made  therefrom  shall  be 
more  than  $500,000.00  by  the  amount  of  $200,000.00,  the 
excess  above  $500,000.00  shall  be  by  the  company  applied 
to  a  reduction  of  the  capital  value  of  the  company,  as 
that  term  is  defined  in  section  16  hereof,  as  follows: 
Firsts  by  the  payment  of  any  then  outstanding  floating 
indebtedness  of  the  company.  Second,  by  the  payment  of 
any  bonds  then  outstanding  of  the  company  which  can  at 
such  time,  according  to  the  conditions  of  the  mortgage 
under  which  such  bonds  were  issued,  be  paid.  Third,  by 
creating  a  sinking  fund  to  assist  in  securing  a  reduction 
of  capital  value,  such'  sinking  fund  to  be  invested  in 
securities  with  the  approval  of  the  city  and  after  the 
payment  of  any  such  floating  indebtedness  or  bonds,  the 
capital  value,  as  that  term  is  defined  by  section  16  here- 
of, shall  be  reduced  by  the  amount  so  paid,  and  there 
shall  be  no  payments  made  thereon  out  of  the  interest 
fund. 

In  the  event  of  the  city  exercising  the  right  to  purch- 
ase the  property  of  the  company  provided  in  section  32 
hereof  or  designating  a  licensee  as  provided  in  section  33 
hereof,  during  operation  by  the  company  in  a  period  of 
less  than  fifteen  years  franchise  duration,  as  provided  by 
this  section,  the  surplus  earnings  shall,  as  hereinbefore 
provided  first  by  deducted  from  the  capital  value,  and 
the  price  to  be  paid  by  the  city,  or  tlie  city's  licensee, 


366 

shall  tlien  be  determined  by  adding  to  the  residue  of 
capital  value  after  applying  the  payments  and  sinking 
fund  hereinbefore  provided  for  the  percentage  thereof 
provided  in  section  32  hereof,  and  should  the  city  pass 
a  grant  in  renewal  hereof  during  a  period  of  less  than 
fifteen  years  franchise  duration,  such  renewal  grant  shall 
contain  as  the  capital  value  of  the  company  the  capital 
value  set  forth  in  section  16  hereof,  increased  as  in  this 
ordinance  provided  and  diminished  by  any  reduction 
thereof  out  of  surplus  earnings  as  is  in  this  section  pro- 
vided. 

Should  the  city  exercise  the  right,  reserved  by  section 

35  hereof,  to  purchase  the  property  at  the  expiration  of 
this  grant  or  any  renewal  hereof,  there  shall  be  deducted 
from  the  price  to  be  paid,  as  determined  under  section 

36  hereof,  any  sum  deducted  from  capital  value  out  of 
surplus  earnings  accrued  in  any  period  of  operation 
under  this  section. 

Sec.  41.  At  any  time  after  the  taking  effect  of  this 
ordinance  the  city  shall  have  the  right  to  pass  an  ordi- 
nance in  renewal  of  the  rights  hereby  granted  for  STich 
period  not  less  than  fifteen  years  nor  less  than  the  then 
unexpired  term  of  this  grant,  as  the  city  may  by  law  be 
authorized  to  make  and  upon  the  passage  of  any  such 
renewal  ordinance,  imposing  upon  the  company  no  sub- 
stantial burden  as  defined  in  section  43  hereof  in  addition 
to  those  imposed  in  this  ordinance,  the  company  shall  at 
once  accept  the  same,  and  upon  its  failure  or  refusal  to 
accept  the  same  the  provisions  of  section  40  hereof  shall 
cease  to  operate,  and  the  city  shall  resume  and  have 
unimpaired  all  the  powers  as  to  regulation  of  schedule 
and  operation  provided  by  section  9  hereof,  and  the  rates 
of  fare  shall  continue  to  be  those  fixed  by  the  city  council 
or  by  arbitration,  under  various  provisions  of  this  ordin- 
ance without  reference  to  the  provisions  of  section  40. 


367 

Sec.  42.  Should  the  duration  of  this  grant  or  any 
grant  made  in  renewal  hereof  come  to  have  less  than  15 
years  unexpired  time  to  run,  and  the  company,  under 
the  provisions  of  section  40  hereof,  install  the  maximum 
rate  of  fare,  the  council  may  still  pass  such  renewal 
grant  as  is  herein  provided,  and  the  company  shall  con- 
tinue under  obligation  to  accept  the  same  under  the  terms 
and  provisions  of  this  section,  and  upon  acceptance  shall 
become  subject  to  the  terms  thereof  as  though  it  had  not 
operated  under  the  provisions  of  section  40  hereof. 

Sec.  43.  Any  ordinance  passed  in  renewal  hereof  shall 
be  deemed  not  to  impose  any  substantial  burden  upon 
the  company  in  addition  to  those  imposed  by  this  ordin- 
ance, when  such  renewal  ordinance  is  either  identical  in 
terms  with  this  ordinance,  except  as  to  the  time  of  ex- 
piration, or  that  the  right  reserved  to  the  city  in  section 
33  hereof  may  in  such  renewal  ordinance  be  made  con- 
tinuously operative  from  and  after  January  1,  1918,  or 
differs  from  this  ordinance  in  such  particular  only  as 
may  be  agreed  upon  between  the  city  and  the  company. 

Sec.  44.  Should  the  city  not  have  exercised  the  right 
reserved  to  it  in  section  32  hereof  by  purchasing  the 
street  railway  property,  on  or  before  the  first  day  of  Jan- 
uary, 1933,  then  on  said  first  day  of  January,  1933,  the 
city  having  previously  given  one  year's  notice  of  its  in- 
tention to  enforce  this  section,  the  line  of  street  railroad 
now  known  as  the  St.  Clair  Avenue  line,  beginning  at  W. 
9th  street  and  extendng  through  St.  Clair  avenue  N.  W. 
and  St.  Clair  avenue  N.  E.  to  East  105th  street,  with  all 
the  physical  property,  rails,  ties,  poles,  trolley,  span,  guy 
and  feed  wires  and  other  fixed  appliances  in  place  in 
said  St.  Clair  avenue  N.  W.  and  St.  Clair  avenue  N.  E. 
shall  upon  the  city  tendering  to  the  company  the  value 
thereof,  determined  as  provided  in  section  36  hereof, 
plus  10^   be  and  become  the   property   of   the   city   of 


368 

Cleveland,  and  the  operation  of  any  grant  or  franchise 
then  in  force  with  relation  thereto  shall  cease  and  deter- 
mine and  the  owning  company  shall  have  no  right  of  any 
kind  with  regard  thereto.  If  on  said  1st  day  of  Jan- 
uary, 1933,  the  city  shall  not  have  the  right  to  own  such 
property,  or  having  such  right  determine  not  to  exercise 
it,  then  the  said  property  shall  pass,  upon  making  the 
same  payment  therefor  as  is  required  from  the  city  in 
case  it  had  and  exercised  the  right  to  acquire  this  prop- 
erty, to  such  person  as  the  city  council  shall  by  resolu- 
tion have  designated  to  become  the  owner  thereof,  and  the 
vesting  of  this  property  in  such  person  so  designated 
shall  not  be  affected  by  any  incapacity  on  the  part  of  the 
city,  itself,  to  own  such  property,  and  in  consideration 
of  the  rights  and  privileges  by  this  ordinance  granted 
to  the  company,  the  company  does  hereby  agree  that  in 
the  event  stipulated  it  will  on  said  1st  day  of  January, 
1933,  execute  all  necessary  deeds,  covenants,  assignments 
and  other  documents  which  may  be  necessary  to  confer 
upon  the  city  or  the  city's  licensee  the  absolute  right, 
title  and  interest  in  and  to  all  the  property  described 
in  this  section  to  be  on  said  day  so  set  over,  transferred 
and  conveyed. 

Sec.  45.  In  case  of  any  failure  of  the  company  to  do 
and  perform  each  and  every  one  of  the  terms  and  condi- 
tions herein  stipulated  to  be  performed  by  it,  and  failure 
to  comply  with  the  general  ordinances  of  the  city  of 
Cleveland  relating  to  street  railroads  now  or  hereafter 
in  force,  and  not  inconsistent  with  the  specific  provisions 
of  this  ordinance,  and  such  failure  shall  continue  for  six 
months  after  written  notice  to  the  company  from  the 
city  of  its  intention  to  exact  a  forfeiture  by  reason  of 
such  failure,  the  company  shall  thereupon  forfeit  all  and 
singular  the  rights  and  privileges  herein  granted,  and 
thereafter  all  such  rights  and  privileges  shall  cease,  and 


369 

such  forfeiture  shall  be  declared  and  enforced  in  the 
manner  provided  in  section  1891  of  the  Revised  Ordin- 
ances of  the  City  of  Cleveland  of  1907. 

Sec.  46.  The  acceptance  of  this  ordinance  by  the  com- 
pany in  the  manner  hereinafter  provided  and  the  ratifica- 
tion thereof  by  the  stockholders  of  the  company  prior 
to  February  10,  1910,  and  the  taking  effect  of  this  ordin- 
ance shall  be  and  constitute  a  surrender,  termination  and 
cancellation  of  all  the  grants  and  franchises  of  every 
kind,  character  and  description  received,  acquired  or 
owned  by  any  of  the  companies  required  by  this  section 
to  sign  the  acceptance  hereof,  from  the  city  of  Cleveland 
or  from  any  other  source  of  authority  to  operate  the 
street  railroad  system  or  any  part  tliereof  hereinbefore 
mentioned,  within  the  present  limits  of  the  city  of  Cleve- 
land, and  shall  be  a  contract  between  the  city  of  Cleve- 
land and  the  Cleveland  Railway  Company,  a  contract  be- 
tween The  Cleveland  Railway  Company  and  The  Forest 
City  Railway  Company,  The  Municipal  Traction  Com- 
pany, The  Low  Fare  Railway  Company,  and  The  Neutral 
Street  Railway  Company,  superseding  and  cancelling  all 
other  relations  between  them  except  such  as  passed  title 
to  said  The  Cleveland  Railway  Company  or  The  Cleveland 
Electric  Railway  Company,  and  for  and  in  consideration 
of  the  privileges  granted  by  this  ordinance.  The  Cleve- 
land Railway  Company  by  the  acceptance  hereof  shall  as- 
sume and  carry  out,  pay  and  perform  all  of  the  obliga- 
tions, covenants  and  conditions  by  this  ordinance  im- 
posed upon  the  company,  and  shall  extend  to,  respect 
and  carry  into  effect  all  rights  reserved  by  the  city  of 
Cleveland  or  granted  to  the  city  of  Cleveland  by  the 
company  by  the  terms  hereof,  or  granted  to  or  imposed 
upon  the  company  by  the  terms  hereof;  and  such  accep- 
tance shall  be  in  writing,  filed'  with  the  city  clerk  within 
five   days   after   the   passage  of   this  ordinance,    in   the 


370 

following  form,  and  such  acceptance  shall  take  effect 
upon  the  taking  effect  of  this  ordinance: 

^'Cleveland,  Ohio,    1909. 

"The  Cleveland  Railway  Company  hereby  accepts  the 

terms  of  Ordinance  No ,  passed  on  the day 

of ,  1909,  by  the  council  of  the  city  of  Cleve- 
land, granting  a  renewal  of  the  street  railway  rights  of 
The  Cleveland  Railway  Company,  fixing  the  terms  and 
conditions  of  such  renewal  grant,  changing  the  rates  of 
fare,  regulating  transfers  and  terminating  existing  grants, 
and  as  consideration  moving  from  The  Cleveland  Rail- 
way Company  to  The  City  of  Cleveland  for  the  passage 
of  such  ordinance  and  the  rights  thereby  granted  by  the 
city  of  Cleveland  to  said  company,  The  Cleveland  Railway 
Company  does  hereby  surrender  and  terminate  all  its 
grants  and  franchises  of  every  kind,  character  and  de- 
scription, received,  acquired  or  owned  by  it,  or  its  pre- 
decessors, from  tJie  city  of  Cleveland,  or  any  other  source 
of  authority  to  operate  street  railways  within  the  present 
limits  of  the  city  of  Cleveland,  and  the  Cleveland  Rail- 
way Company,  for  said  consideration  and  for  the  surren- 
der hereinafter  specified  by  The  Low  Fare  Railway  Com- 
pany, The  Forest  City  Railway  Company,  The  Municipal 
Traction  Company  and  The  Neutral  Street  Railway  Com- 
pany, does  hereby  assume,  and  agree,  to  carry  out,  pay, 
and  perform,  all  the  obligations,  covenants  and  condi- 
tions of  said  ordinance,  and  to  extend  to,  respect  and 
carry  into  effect  all  rights  reserved  therein  by  the  city 
of  Cleveland  or  granted  to  said  city  by  The  Cleveland 
Railway  Company  by  the  terms  thereof;  and  as  consider- 
ation moving  from  The  Cleveland  Railway  Company  for 
the  surrender  by  The  Low  Fare  Railway  Company,  The 
Forest  City  Railway  Company,  The  Municipal  Traction 
Company  and  The  Neutral  Street  Railway  Company,  of 
all   claims,   demands  and   rights  against  The  Cleveland 


371 

Railway  Company  of,  in  or  to  any  of  the  properties,  lines 
or  grants  referred  to  in  this  ordinance,  The  Cleveland 
Railway  Company  hereby  assumes  and  agrees  to  pay  the 
debts  now  existing  of  said  The  Forest  City  Railway  Com- 
pany, The  Municipal  Traction  Company  and  The  Neutral 
Street  Railway  Company,  as  specified  in  said  ordinance; 
and  in  consideration  thereof  said  The  Low  Fare  Railway 
Company,  The  Forest  City  Railway  Company,  The  Muni- 
cipal Traction  Company  and  The  Neutral  Street  Rail- 
way Company,  hereby  release  said  The  Cleveland  Rail- 
way Company  from  all  claims  and  demands  whatsoever, 
and  surrender  to  it  all  claim  to  or  rights  which  they  or 
either  of  them  may  have  in  or  to  any  of  the  property, 
lines  or  routes  referred  to  in  the  above  ordinance  or  in 
the  hands  of  the  receiver  or  against  one  another  and  agree 
to  execute  and  deliver  to  the  Cleveland  Railway  Com- 
pany all  such  instruments  as  may  be  necessary  to  effectu- 
ate the  same. 

The  Cleveland  Railway  Company. 

By President. 

Secretary. 

The  Low  Fare  Railway  Company. 

By President. 

Secretary. 

The  Forest  City   Railway  Company. 

By President. 

Secretary. 

The  Municipal  Traction   Company. 

By President. 

Secretary. 

The  Neutral  Street  Railway  Company. 

By President. 

Secretarv. 


372 

Sec.  47.  The  purpose  of  this  ordinance  is  to  establish 
and  settle  the  relations  between  the  city  of  Cleveland 
and  the  Cleveland  Railway  Company  by  a  contract  which 
will  secure  to  The  Cleveland  Railway  Company  unim- 
paired the  capital  value  described  in  section  16  hereof 
and  the  rates  of  return  tliereon  provided  in  said  section, 
and  which  will  also  secure  to  the  city  of  Cleveland  ade- 
quate and  ejBflcient  service  at  the  cost  thereof,  not  exceed- 
ing the  maximum  rate  of  fare  specified  in  section  22; 
and  the  provisions  of  this  ordinance  in  respect  to  the 
fixing,  from  time  to  time,  of  rates  of  fare  to  be  charged 
by  the  company,  the  provisions  in  respect  to  the  ascer- 
tainment of  the  value  of  the  property  of  the  company 
and  the  items  from  time  to  time  constituting  the  capital 
value  thereof,  the  provisions  in  reference  to  the  designa- 
tion of  the  City  Street  Railroad  Commsisioner  and  the 
duties  to  be  performed  by  him,  the  provisions  with  re- 
spect to  the  right  and  power  of  the  city,  through  the  City 
Street  Railroad  Commissioner  or  otherwise,  to  be  in- 
formed by  inspection  of  the  books,  papers,  documents, 
vouchers  and  property  of  the  company  as  to  the  value  of 
said  property  and  the  cost  of  service,  and  the  provisions 
in  respect  to  the  acquisition  of  the  property  of  the  com- 
pany by  the  city  or  by  a  purchaser  designated  by  the 
city  therefor,  as  set  forth  in  the  several  sections  of  tliis 
ordinance  dealing  with  said  subjects,  are  mutually  un- 
derstood and  declared  to  be  in  their  substance  material 
to  the  accomplishment  of  the  aforesaid  purposes  for 
which  this  contract  is  made;  but  nevertheless,  in  order 
to  avoid  an  entire  failure  of  this  grant  in  consequence  of 
invalidity  of  any  of  the  aforesaid  provisions,  it  is  further 
provided  as  follows: 

1.  If  any  material  part  of  the  provisions  of  this  or- 
dinance in  respect  to  the  fixing,  from  time  to  time,  of 
the  rates  of  fare  to  be  charged  by  the  company,  includ- 


373 

iiig  the  submission  of  such  rates  of  fare  to  arbitration 
in  ease  of  disagreement  between  the  parties,  shall  be  ad- 
judged to  be  invalid,  then,  except  as  provided  in  section 
40,  all  of  the  provisions  hereof  respecting  the  increase 
or  decrease  of  fare,  after  the  expiration  of  tlie  period 
during  which  the  initial  rate  of  fare  is  to  continue  in 
force  as  prescribed  by  section  23,  shall  be  abrogated  and 
in  lieu  thereof  the  council  of  the  city  of  Cleveland  shall 
have  pow«r,  from  time  to  time,  to  fix  by  ordinance  the 
rate  of  fare  to  be  charged  by  the  company  for  the  trans- 
portation of  passengers,  not  exceeding  the  maximum  rate 
specified  in  section  22;  but  the  council  shall  not  at  an}' 
time  decrease  the  rate  of  fare  unless  there  shall  then  be 
a  sum  exceeding  $500,000  in  the  interest  fund,  and  any 
rate  of  fare  so  fixed  by  the  council  shall  not  impair  the 
ability  of  the  company  to  earn  suflicient  money  to  meet 
the  payments  provided  for  in  sections  16  and  18  hereof 
after  paying  operating  expenses  and  mainteiiance  and 
such  other  allowances  for  depreciation  and  renewals 
as  may  from  time  to  time  be  made  pursuant  to  the  pro- 
visions of  this  ordinance. 

2.  If  any  material  part  of  the  provisions  of  this  or- 
dinance providing  for  the  settlement  or  decision  by  arbi- 
txation  of  questions  other  than  the  increase  or  decrease 
of  the  rate  of  fare  which  may  arise  between  the  city  and 
the  company  shall  be  adjudged  to  be  invalid,  then  as  to 
any  such  question  thereafter  arising  between  the  parties, 
and  which  by  the  terms  hereof  is  to  be  so  submitted  to 
arbitration,  the  council  of  the  city  of  Cleveland  shall  be 
substituted  for  the  board  of  arbitration  by  this  ordinance 
provided,  and  the  said  council  shall  be  empowered  to  de- 
termine such  question  in  accordance  with  the  rules  and 
principles  herein  prescribed  so  far  as  the  same  may  be 
applicable  and  its  action  shall  be  binding  on  both  parties, 
unless  the  same  shall  be  annulled  or  modified  by  a  court 


374 

of  competent  jurisdiction,  and  if  the  question  involved 
be  in  reference  to  service,  the  company  shall  at  once  in- 
stall the  kind  of  service  directed  by  the  council  until  such 
court  shall  otherwise  order. 

3.  If  at  any  time  the  provisions  of  this  ordinance  for 
the  designation  of  a  city  street  railroad  commissioner 
shall  be  held  invalid  or  if  at  any  time  there  shall  be  no 
city  street  railroad  commissioner,  the  city  ijaay  designate 
the  city  auditor  or  any  other  officer  or  employe  of  the 
city  tx)  perform  all  the  duties,  and  to  have  all  the  rights, 
privileges  and  powers  in  this  ordinance  described,  as  ap- 
pertaining to  the  city  street  railroad  commissioner. 

4.  In  case,  however,  the  city,  having  legal  authority 
so  to  do,  shall  determine  to  purchase  and  take  over  the 
property  of  the  company  or  a  part  thereof,  or  in  case  the 
city  shall  designate  a  licensee  to  purchase  the  same,  as 
provided  in  sections  32,  33  and  44,  refusal  by  the  com- 
pany to  comply  with  any  material  provision  of  said  sec- 
tions or  any  of  them  or  of  any  other  provision  of  this 
ordinance  designed  to  carry  out  such  purchase,  by  the 
city  of  by  such  purchaser,  whether  on  the  ground  that  the 
same  are  not  binding  on  it  or  for  any  other  reason,  shall 
work  a  forfeiture  of  the  grant  made  by  this  ordinance. 

Sec.  48.  This  ordinance  shall  take  effect  and  be  in 
force  from  and  after  its  passage  and  legal  publication, 
and  the  filing  of  an  acceptance  in  writing,  as  hereinbe- 
fore provided. 

Passed  Dec.  18,  1909. 

C.  W.  Lapp, 
President  of  the  Council. 
Peter  Witt,  City  Clerk. 
Approved  by  the  Mayor,  December  18,  1909. 


375 

No.  4. 

Tables   Showing  Influence  op  Gold  Pboduction   on 

Prices. 

Table  No.  1. 

Quantities,  in  avoirdupois  pounds,  of  22  staple  agricul- 
tural products  of  America,  purchasable  at  Chicago  prices 
July  1,  1874,  with  one  pound  troy  of  pure  gold,  or  with 
16  pounds  troy  of  pure  silver.  The  prices  given  are  in 
greenbacks,  with  gold  and  silver  coin  at  1.101/2. 

Articles                                              Price.  Lbs. 

Dairy  butter |  0.24  per  lb  1,142 

Wool,  fine  unwashed  . .  .* 0.30  per  lb  913 

Turkeys  0.12  per  lb  2,268 

Chickens    0.10  per  lb  2,741 

Cotton 0.17  per  lb  1,612 

Hams  0.11  per  lb  2,492 

Cheese    0.12  per  lb  2,284 

Eggs 0.12  per  doz  3,426 

Lard   11.10  per  cwt  2,469 

Hides   0.07  per  lb  3,916 

Steers,  medium   6.10  per  cwt  4,494 

Mess  pork 17.75  per  bbl  3,089 

Hogs 6.00  per  cwt  4,568 

Sheep   4.50  per  cwt  5,101 

Flour    :  6.00  per  bbl  8,990 

Flax  Seed  1.75  per  bu  8,775 

Beans 2.10  per  bu  7,833 

Eed  wheat.  No.  2 1.16  per  bu  14,175 

Barley    0.86  per  bu  15,300 

Rje  0.83  per  bu  18,497 

Oats,  No.  2 0.401/2  per  bu  21,657 

Corn,  No.  2 0.5914  per  bu  25,900 

161,642 

Divide  the  aggregate  of  161,642  pounds  by  22,  the  nuni- 
ber  of  articles,  and  we  have  7,347  as  the  average  number 
of  pounds  of  staple  agricultural  products  purchasable 
with  one  pound  troy  of  gold  or  16  pounds  troy  of  silver. 


376 

That  is,  in  1874  the  price  or  value  of  1  pound  of  gold,  or 
16  pounds  troj  of  pure  silver  was  7,347  pounds  of  the 
staple  products  of  the  farm. 

Table  No.  2. 

Quantities  in  advoirdupois  pounds  of  22  staple  agricul- 
tural products  of  America  purchasable  at  Chicago  prices 
July  1,  1896,  with  one  pound  troy  of  pure  gold. 

Articles  Price  Lbs. 

Dairy  butter $  0.12  per  lb  2,067 

Wool,  fine  unwashed 0.12  per  lb  2,067 

Turkeys   0.09  per  lb  2,756 

Chickens    0.08  per  lb  3,101 

Cotton    0.07 1/lOper  lb  3,494 

Hams   0.083/8  per  lb  2,962 

Cheese    0.07  per  lb  3,544 

Eggs 0.10  per  doz  3,721 

Lard   3.621/2  per  cwt  6,842 

Hides   0.0534  per  lb  4,314 

Steers,  medium   3.90  per  cwt  6,360 

Mess  pork 6.821/2  per  bbl  7,268 

Hogs     3.20  per  cwt  7,752 

Sheep   3.50  per  cwt  7,087 

Flour 3.65  per  bbl  13,320 

Flax  seed   O.751/2  perbu  19,713 

Beans  0.85  per  bu  18,605 

Red  Wheat,  No.  2 0.56  per  bu  26,580 

Barley    0.32  per  bu  37,210 

Rye 0.2914  perbu  47,109 

Oats,  No.  2 0.15%  per  bu  50,800 

Corn,  No.  2 0.27  per  bu  55,122 

331,794 

Divide  the  aggregate  of  331,794  pounds  by  22,  the  num- 
ber of  articles,  and  we  have  15,081  as  the  average  number 
of  pounds  of  staple  agricultural  products  purchasable 
with  one  pound  troy  of  gold  July  1,  1896,  showing  an  in- 
crease in  the  purchasing  power  of  gold  over  that  of 
July  1,  1874,  of  105  per  cent,  and  a  decrease  in  prices 
of  a  little  more  than  one-half,  or  50  per  cent. 


377 


Table    No.    3. 

Quantities  in  advoirdupois  pounds  of  22  staple  agricul- 
tural products  of  America  purchasable  at  Chicago  prices 
July  1,  1909,  with  one  pound  troy  of  pure  gold. 

Articles.  Price.  Lbs. 

Dairy  butter   f  O.231/2  per  lb  1,055 

Wool,  fine  unwashed 0.24  ^  per  lb  1,033 

Turkeys    0.13  per  lb  1,908 

Chickens 0.131/,  per  lb  1,837 

Cotton 0.131/2  per  lb  2,067 

Hams    0.16  per  lb  1,771 

Cheese 0.13  per  lb  1,908 

Eggs    0.21  perdoz  1,771 

Lard    0.11  7/10  per  lb  2,120 

Hides    0.101/2  per  lb  2,364 

Steers,  medium 6.40  per  cwt  3,875 

Mess  pork   20.00  per  bbl  2,480 

Hogs    7.68  per  cwt  3,221 

Sheep    4.70  per  cwt  5,277 

Flour    6.50  per  bbl  7,571) 

Flax  seed 1.66  per  bu  8,964 

Beans    2.50  per  bu  5,952 

Wheat,  No.  2  red 1.14  per  bu  12,054 

Barley 0.62  per  bu  19,200 

Rye    0.81  per  bu  18,372 

Oats,  No.  2 0.52  per  bu  15,264 

Corn,  No.  2 0.73  per  bu  18,928 

139,000 

Divide  the  aggregate  of  139,000  by  22,  the  number  of 
articles,  and  we  have  6,318  as  the  number  of  pounds  of 
staple  agricultural  products  purchasable  with  one  pound 
troy  of  gold  July  1,  1909,  or  a  decrease  from  July  1,  1896, 
of  8,763  pounds,  or  58  per  cent;  which  means  that  prices 
are  more  than  twice  as  high  as  they  then  were.  Com}>iired 
with  the  prices  which  prevailed  July  1,  1874,  they  are 
14  per  cent  higher. 


378 


EXPLANATORY. 

I  started  my  tables  with  the  prices  of  July  1,  1874, 
because  at  that  date  one  pound  troy  of  gold  and  sixteen 
pounds  troy  of  silver  were  of  equal  value.  For  many 
years  before  that  date  sixteen  pounds  of  silver  had  been 
more  valuable  than  one  pound  of  gold.  Since  then  the 
value  of  silver  bullion  has  declined,  but  we  are  not 
concerned  about  silver  at  present,  although  the  question 
suggests  itself  whether  the  free  and  unlimited  coinage  of 
silver,  would  have  produced  any  such  elevation  in  prices 
as  the  deluge  of  gold  has  done. 

Did  not  compile  the  prices  of  January  1,  1910,  be- 
cause it  would  not  be  proper  to  compare  July  prices 
with  January  prices.  To  what  extent  there  has  been  a 
recent  increase  in  prices  can  best  be  determined  July  1, 
1910. 

I  have  never  claimed  that  this  method  of  ascertaining 
the  fluctuations  in  the  value  or  purchasing  power  of  gold 
is  absolutely  correct.     It  is  only  approximately  so. 

Every  commodity  has  its  own  supply  and  demand,  but 
all  commodities  are  affected  by  the  value  of  the  standard 
with  which  they  are  measured.  The  steady  increase  in 
the  annual  production  of  gold,  must  necessarily  result 
in  higher  prices,  and  still  higher  prices.  Higher  prices 
Induce  great  business  activity  and  a  larger  consumption 
of  all  staple  products,  and  they  inflate  credits,  but  after 
allowances  are  made  for  all  these  indirect  influences  of  a 
greater  production  of  gold,  the  direct  influence  is  very 
large,  and  it  can  not  be  overcome. 

Prof.  Jevons,  writing  in  1863,  reached  the  conclusion 
that  the  gold  from  California  and  Australia,  had  in- 
creased prices  fifteen  per  cent,  after  making  due  allow- 


379 

ance  for  the  expansion  of  credits  and  other  temporary 
causes.  His  tract  entitled  "A  serious  fall  in  the  value 
of  gold  ascertained  and  its  social  effect  set  forth,"  gave 
him  great  distinction  as  a  political  economist.  In  it  he 
said: 

"While  the  elasticity  of  credit,  then,  may  certainly 
give  prices  a  more  free  flight,  the  inflation  of  credit  must 
be  checked  by  the  well  defined  boundary  of  available  capi- 
tal, which  consists  in  the  last  resort  of  the  reserve  of 
notes,  equivalent  to  gold,  in  the  banking  department  of 
the  Bank  of  England.  Prices  temporarily  may  rise  or 
fall  independently  of  the  quantity  of  gold  in  the  coun- 
try; but  ultimately  they  must  be  governed  by  this  quan- 
tity. Credit  gives  a  certain  latitude  without  rendering 
prices  ultimately  independent  of  gold." 

Senator  Crawford,  of  South  Dakota,  in  his  able  speech 
on  the  subject  in  the  Senate  of  the  United  States,  February 
15,  1910,  quotes  from  Prof.  Norton,  of  Yale,  as  follows: 

"The  popular  outcry,  now  sweeping  the  country,  di- 
rected against  prevailing  high  prices',  forcibly  illustrates 
some  of  the  social  consequences  of  the  depreciation  of 
gold.  *  *  *  Gold  ore  yielding  |20  gold  per  ton  is 
>relatively  rare  in  nature.  On  the  other  hand,  gold  ore 
running  from  four  and  five  dollars  per  ton  is  distributed 
*  very  widely,  and  the  deposits  are  of  large  area.  When, 
therefore,  mining  engineers  and  chemists  succeeded  in 
devising  methods  of  extracting  gold  from  ore  as  low  in 
grade  as  $5  per  ton  at  a  profit  the  potential  supply  of 
gold  enormously  increased.  As  a  result  of  these  scientific 
discoveries  the  annual  production  of  gold  began  to  mount 
at  an  increasing  rate  in  the  nineties.  Exactly  as  the  suc- 
cessive issues  of  greenbacks  by  our  government  during  the 
civil  war  forced  prices  to  higher  and  higher  levels  until 
finally  commodities  sold  at  two  and  three  fold  previous 


380 

prices,  so  gold,  ever  increasing-  in  production,  has  pro- 
du<?ed  a  similar  effect. 

"Bradstreet's  Index  of  average  prices  indicates  an  ad- 
vance of  60  per  cent  in  prices  since  July  1,  189<).  In  other 
words,  a  dollar's  worth  of  goods  today  could,  have  been 
purchased  for  62  cents  in  1896.  During  the  past  thirteen 
years  prices  have  maintained  an  average  advance  of  4  1-2 
per  cent  per  annum. 

"The  individual,  therefore,  who  deposited  |1  in  the  sav- 
ings bank  in  1896  to  be  compounded  at  4  per  cent  for  the 
thirteen  years  at  the  present  time  would  have,  principal 
and  accumulated  interest,  barely  sufficient  to  purchase  the 
goods  which  he  could  have  purchased  with  his  original 
dollar  in  1896. 

"Measured  in  purchasing  power,  the  savings  bank  de- 
positors of  the  United  States  in  reality  have  received  no 
interest  on  their  funds  for  thirteen  years,  since  the  in- 
terest credited  just  about  balances  the  depreciation  of 
their  funds  in  purchasing  power. 

"The  gold  inflation  is  world-wide,  and  prices  every- 
where have  moved  upward  in  response.    *    *    * 

"At  the  present  time  popular  clamor  seeks  to  fix  the  re- 
sponsibility upon  the  trusts,  just  as  in  Washington's  day 
a  similar  agitation  resulted  in  laws  against  'forestallers 
and  monopolists,'  whereas  the  true  cause  lay  in  the  de-  • 
predating  continental  currency.  'Not  worth  a  continen- 
tal' in  the  future  may  be  substituted  by  the  phrase  'not 
worth  a  gold  dollar,'  for  how  serious  the  situation  may 
become  nobody  knows." 


DATE  DUE 


GAYLORD 

PRINTED  INU.S    A. 

A     001  041  205 


